topic Re: Important question regarding collections in Rebuilding Your Credit

Important question regarding collections

Anonymous — Mon, 08 Mar 2021 08:14:46 GMT

I found I had a collections with my cell phone company. (I moved my number to my wife's account with another company and was put into collections for the balance of the phone purchase immediately)

I paid it off (didn't know about pay for delete at the time) the first week of February with the collections company and it was reported as paid with the buereaus except TU by the end of Feb. TU shows it was paid on 3/4 and now on 3/7 Verizon has contacted TU that it is a charged off account.

Can they change the status of a collection to a charge off after it's been paid? I thought after the OC sells off the account, they're not allowed to report on it anymore?

I would love to get some help with this? What can I do? I don't want a charge off on my account after I paid it.

Thanks for your time.

Re: Important question regarding collections

OmarGB9 — Mon, 08 Mar 2021 08:18:39 GMT

I could be wrong, but just because it just now reported as a charge off, doesn't mean they actually charged it off on 3/7. The actual charge off was most likely taken earlier, when they reported you to a CA and maybe the CO just now got reported to the bureaus. I'll ping @RobertEG for more info for you.

Re: Important question regarding collections

Anonymous — Mon, 08 Mar 2021 12:17:45 GMT

It took me some time to understand this as well when I was going through my rebuild so let me break it down for you.

A derogatory / negative account can appear twice on your credit report. It can NOT appear as two collections but it can appear as a charge off from original creditor and a collection. It can NOT appear with balances in two places but it can appear as I stated earlier as a charge off with zero balance and a collection with a balance.

Now every time your credit is sold to a new debt collector (it often moves around) the older collection MUST be removed. Period. Whether or not the new debt collector puts a new collection on your file is up to them but a collection cannot stay on your report from the same creditor after the debt has been sold.

All of this has absolutely nothing to do with the charge off status from the original creditor. Paid or not it will always show as a charge off with zero balance once it has been sold. Obviously you can't sell a paid chage off though. So to answer your question charge offs and collections can appear for the same debt but only one can have a balance and only one collection can appear at a time.

If you want a paid charge off or collection to disappear your only recourse is a goodwill letter. Once a debt has been sold the original creditor has NO SAY in if a new collection gets removed or not but they can remove the charge off they placed originally. Hope this helps!

Edit: Just to make this perfectly clear. No they will not change the charge off to a collection after it has been paid. You need to goodwill. Not all charge offs will become collections. The collection designation is mostly used by debt collectors since the original creditor charges off the debt and is done with you. If they try to collect most will simply write a collection remark in the comments of the charge off without coding it as a collection account.

Re: Important question regarding collections

Anonymous — Mon, 08 Mar 2021 12:26:06 GMT

@Anonymous wrote:
It took me some time to understand this as well when I was going through my rebuild so let me break it down for you.

A derogatory / negative account can appear twice on your credit report. It can NOT appear as two collections but it can appear as a charge off from original creditor and a collection. It can NOT appear with balances in two places but it can appear as I stated earlier as a charge off with zero balance and a collection with a balance.

Now every time your credit is sold to a new debt collector (it often moves around) the older collection MUST be removed. Period. Whether or not the new debt collector puts a new collection on your file is up to them but a collection cannot stay on your report from the same creditor after the debt has been sold.

All of this has absolutely nothing to do with the charge off status from the original creditor. Paid or not it will always show as a charge off with zero balance once it has been sold. Obviously you can't sell a paid chage off though. So to answer your question charge offs and collections can appear for the same debt but only one can have a balance and only one collection can appear at a time.

If you want a paid charge off or collection to disappear your only recourse is a goodwill letter. Once a debt has been sold the original creditor has NO SAY in if a new collection gets removed or not but they can remove the charge off they placed originally. Hope this helps!

Edit: Just to make this perfectly clear. No they will not change the charge off to a collection after it has been paid. You need to goodwill. Not all charge offs will become collections. The collection designation is mostly used by debt collectors since the original creditor charges off the debt and is done with you. If they try to collect most will simply write a collection remark in the comments of the charge off without coding it as a collection account.

Just to clarify, it *can* report two places, where both report a balance. This is when a creditor has a CA collecting on their behalf, but they have not sold the debt.

Also, even if a creditor only has a CA helping the them to collect on a debt, the original creditor has zero say in the CA's reporting. The only exception is if they cancel the collection authority of the CA, then the CA must delete the CA from the CRs. That is why we say if the CA does not do PFD, to try and get the OC to recall the debt from the CA. The original creditor cannot force the CA to delete the CA from your CRs just because you paid it or made an agreement with the original creditor to do so.

Re: Important question regarding collections

Anonymous — Mon, 08 Mar 2021 13:36:09 GMT

+1

Just to clarify, it *can* report two places, where both report a balance. This is when a creditor has a CA collecting on their behalf, but they have not sold the debt.

Also, even if a creditor only has a CA helping the them to collect on a debt, the original creditor has zero say in the CA's reporting. The only exception is if they cancel the collection authority of the CA, then the CA must delete the CA from the CRs. That is why we say if the CA does not do PFD, to try and get the OC to recall the debt from the CA. The original creditor cannot force the CA to delete the CA from your CRs just because you paid it or made an agreement with the original creditor to do so.

In my experience with multiple debt collections some of which were assigned and others which were sold:

When debt is assigned and not sold the debt collector assisting in the collection is not supposed to put an account on your report at the same time the charge off is reporting a balance. I've seen original creditors remove the entire account during the assign period (and then put it back on afterwards) or drop the balance owed to zero allowing the collection agency to report. But if they do not agree to do this the collection agency is not supposed to report. Of course some do. But your balances are supposed to add up to your owed debt and not double count.

But as I stated this is just my experience and I've seen it play out a few times. I'm curious @Anonymous if you can share some examples of double balance reporting that has been challenged and still held through disputes. I definitely don't mind correcting my understanding if I'm wrong. 😀

Re: Important question regarding collections

RobertEG — Mon, 08 Mar 2021 16:15:08 GMT

As for the issue of both the original creditor and a debt collector reporting a balance on the same debt, it is clearly proper if the debt remains unpaid and the debt collector only has assigned collection authority (i.e., the debt collector does not own the debt, but is only collecting on behalf of the OC/owner.

In that event, the creditor is properly reporting the debt balance owed to them, and the debt collector is reporting the balance that they are attempting to collect on behalf of the owner. The debt collector is not reporting debt balance owed to them, but rather only the amount they are attempting to collect. Both the OC account, reporting a balance, and a collection, also reporing a balance, can simultaneously report on the same debt. That is a very frequent and common occurence, and is not improper double balance reporting.

As for addition of reporting of reference to a charge-off at some later time, even after the debt is paid, that is proper if the creditor did actually take a charge-off, and the reported delinquency was after the CO was taken.

A creditor does not report the date that they actually take the accounting measure of moving the delinquent debt from a receivable asset column in their accounting ledger over to a bad debt, non-asset column. The CRAs do not even have a metro 2 reporting code to report the actual date of a charge-off.

A creditor can, at any time after they have taken the CO accounting measure, report the current or prior monthly delinquency status as CO for any month that the account was both delinquent and previously subjected to a charge-off. They can do that at any time, providing it meets those two criteria.

Just as prior monthly delinquencies are not deleted based on subsequent payment of the debt, reference to CO delinquency status for any prior month is not deleted based on payment of the debt. The account,however, cannot continue to report a current delinquency status for any month after the debt is discharged.

Re: Important question regarding collections

Anonymous — Mon, 08 Mar 2021 17:13:37 GMT

I can understand what you guys are saying, but it only ever showed up as a collections from a CA. I then paid it. The CA reported a $0 balance. 3 days later the OC reported it as a charged off account.

The debt is paid and I owe nothing. I'm confused as to why they didn't list it as a charge off until after the collections was paid in full.

Does this action 1- worsen my credit score than it was as being reported as a paid collection and 2- extend the 7 year time frame until it falls off of my report?

Re: Important question regarding collections

Anonymous — Mon, 08 Mar 2021 17:24:27 GMT

I guess I'll have to wait until my next credit report for TU shows up (tomorrow on credit wise and Thursday for NerdWallet) and see if they are reporting a delequency for this paid account.