Collections

[Anonymous]

I'm new to this but if I have an account in collections that has been years should I try to pay it off or just let it be? I always have mixed answers but I've just seen it on my report still.

[Gramz]

I would say let it be if it's not reporting a balance every month.  How long have the account been in collection? What is the DOFD? 

With those question answer I know someone else can give a better insight on this.

welcome to the forums.

[Anonymous]

OP, I'm in a similar situation as you are right now.  I have one remaining collection account with PRA that is due to fall off at the end of 2018.  I'm debating whether to pay it off or not.  From what I read from this forum, it seems like many has suggested not to pay off collection account unless it's a PFD because paying it off will cause the score to decrease because it will be updated.  I understand that, but my situation is a bit different.  My collection account has been updated regularly by PRA at the beginning of each month and the middle of the month ever since I contacted them to PFD and they refused.  I would like to know 1) if I pay it, and they update it as paid in full, will it stop updating each month, 2) will I see an increase in my fico after the account is updated as paid.   

[gdtobefree]

That is correct. If you PIF it may reset the SOL. 

If it is past the SOL in your state then they cannot legally sue you for it. 

I would hold on for just a little bit longer especially if it is due to fall off your reports that soon. 

I personally, would not pay it. Before anyone flames me for that comment remember this, A JDB pays pennies on the dollar for a uncollectable debt and will try to milk you for the full amount. This is how they stay in business. Sour their milk and let them sit in it. 

[Adkins]

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@Anonymous wrote:

OP, I'm in a similar situation as you are right now.  I have one remaining collection account with PRA that is due to fall off at the end of 2018.  I'm debating whether to pay it off or not.  From what I read from this forum, it seems like many has suggested not to pay off collection account unless it's a PFD because paying it off will cause the score to decrease because it will be updated.  I understand that, but my situation is a bit different.  My collection account has been updated regularly by PRA at the beginning of each month and the middle of the month ever since I contacted them to PFD and they refused.  I would like to know 1) if I pay it, and they update it as paid in full, will it stop updating each month, 2) will I see an increase in my fico after the account is updated as paid.   

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PIF does NOT reset the SOL, but it will cause the debt to update with the date it was paid on your credit report, which can hurt. That's why PFD is so much better, because the debt is just gone!

1. Yes, they should stop updating it every month once it's PIF 

2. Small increase, maybe. The constant update to being "new" on you credit report does hurt but score increases really vary by a person's report 

(Personally, unless you need those extra points for a loan or something, I'd let it fall of my report! PRA is the worst!)

[RobertEG]

If a debt collector makes an updating reporting of their collection that includes a continued balance and shows the collection as still open (i.e., the debt is not paid), that update effectively states that the period of delinquency of the debt has extended at least up to the date of the new reporting.  That is similar to the update by a creditor of the currrent delinquency level from, for example, 60 to 90-days late.

However, once the debt is paid, any updated reporting would show a $0 balance, paid collection, and thus no longer "extends" the effective delinquency on the debt.  Debt collectors are instructed under the CRA reporting manual to discontinue regular updating of collections once paid, but even if they do update, it will no longer include any statement that the debt remains delinquent, and thus will no longer effect your scoring.

Once you pay a debt, there is no longer any delinquency, and thus no civil action is possible to collect on a debt that no longer exists.

Thus, PIF terminates any SOL considerations, and does not "reset" the SOL.  "Reset" is only an issue if a payment is for less than the full amount and is not accepted as a legal settlement of the debt.