Should I pay off an old collections credit card account?

[xdunlapx]

Hi, I am wondering if I should pay off my old collections account which is my first credit card. I'm not sure when it's due to drop off though. I was thinking this year because it's 7 years after it went to collections. But someone told me on another forum that it will drop off 7 years after the first delinquency. Which is true?? And should I go ahead and pay it off in December when I get a sum of money?

I'm unable to work for a living so I live with my parents, I'm 28 years old. We don't have the money now to pay it off but I know I'm getting some money in December (a pell grant for school which I don't need) and thought I'd pay it off with that money. They are still actively collecting on the account (phone calls daily that I don't answer) I did call them back one day last week or the week before and told them I may pay it off in december and explained my situation that I can't work and have no income.. What should I do? Might I already be blacklisted from Bank of America or will they blacklist me if it drops off and they quit collecting? I'm trying to rebuild my credit. My score is currently about 596 and I just applied for a secured mastercard through capital one. I deposited more than the minimum amount (thanks dad!) and will receive it in the mail probably in a week. So I'll use that card responsibly since it will only have a credit limit of $226 if I don't increase the limit. But if I do not pay off BOA I will increase my limit on the card with my pell grant money. OR If I do pay it off and I have some money left over I will raise my limit on my secured card. 

Does anyone here have any solid advice for me? Thanks!

[Revelate]

Welcome to the forums!

I'm generally of the opinion that it's always better to pay one's debts; however, I have to admit that a collection that old would be way down the list of my financial priorities if I was strapped for cash.  It does drop off after 7 years so your information is correct.

That said, you may well be blacklisted from BOFA until you pay it, which might be inconvenient depending on your needs it isn't the end of the world either.  You can always pay it in the future as well if you so choose when you have additional financial resources.

Anyway, while I think putting additional money towards the Cap One secured card is a swell idea, if you're trying to rebuild credit, take some of the additional money and go open another secured card instead.  You don't care about limits right now, it's just about having tradelines and making positive payment history and then letting time do it's magic when it comes to the FICO algorithm; however, figuring out what's needed and coming up with a plan such as you're doing is absolutely a fantastic start.

[xdunlapx]

Oh so it does drop off after 7 years of being in collections --NOT from the first deliquency?

Ok I hadn't thought of opening up a second secured card. That is a good idea. So having two cards would look better (assuming I pay in full every month) than one card with a larger credit limit than what I started with? So let's say I pay more on the Cap One card and put my limit up to $500 and get a second secured card that has a $500 limit that would be good? 

Since my parents buy most of what I use I wouldn't be likely to have a balance more than $100 on it at any one time with the exception of here soon I'll need to buy MS Office for college. If I can get the Amazon.com deal of $89.99 for it I'll do that but usually it retails for $120 or thereabouts. 

I may have to work my dad into accepting me opening a second secured card. He took his time in thinking about even the first secured card. I have to use their checking accounts to deposit the money onto the card since I don't have an account due to a poor decision in teh past of letting a bounced check ruin my account and then not paying it AGAIN. I had bounced a check, paid the bank fully and put only a few dollars in my account. Then they went ahead and charged me another OD fee! They refused to remove the fee since they felt it was my fault. That payment I made was cleared, then the next day they charged me an OD fee which of course was more than like the $2 i had in teh account so it went red again and then I (my dad) didn't pay it off because I refused to let him. So I'm in chexsystems for a few more years unfortunately.

Yeah my whole credit is screwed up. But I want to get this fixed but I am just trying to figure this all out. I will have just over $2000 coming my way in december. My first disbursement of the pell grant went towards a new mac laptop (my first mac) since I needed a reliable computer for school and I had to choose between MS Windows and Mac so I chose Mac because I had nothing but problems with MS Windows recently. So I decided it was time to switch since I had the money.

I don't want Bank of America to blacklist me. I want to do business with them again eventually. I don't know if I'm ever going to get SSDI.. I've been trying since 2006. I keep getting denied. I do have lawyer now so hopefully I'll get it soon, that'll give me some spending money each month. But until then I don't know if I should wait and pray that I get SSDI (and the huge backpay they will owe me!) or if I should pay the BoA now (in december).. 

[bichonmom]

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@xdunlapx wrote:

Hi, I am wondering if I should pay off my old collections account which is my first credit card. I'm not sure when it's due to drop off though. I was thinking this year because it's 7 years after it went to collections. But someone told me on another forum that it will drop off 7 years after the first delinquency. Which is true?? And should I go ahead and pay it off in December when I get a sum of money?

I'm unable to work for a living so I live with my parents, I'm 28 years old. We don't have the money now to pay it off but I know I'm getting some money in December (a pell grant for school which I don't need) and thought I'd pay it off with that money. They are still actively collecting on the account (phone calls daily that I don't answer) I did call them back one day last week or the week before and told them I may pay it off in december and explained my situation that I can't work and have no income.. What should I do? Might I already be blacklisted from Bank of America or will they blacklist me if it drops off and they quit collecting? I'm trying to rebuild my credit. My score is currently about 596 and I just applied for a secured mastercard through capital one. I deposited more than the minimum amount (thanks dad!) and will receive it in the mail probably in a week. So I'll use that card responsibly since it will only have a credit limit of $226 if I don't increase the limit. But if I do not pay off BOA I will increase my limit on the card with my pell grant money. OR If I do pay it off and I have some money left over I will raise my limit on my secured card. 

Does anyone here have any solid advice for me? Thanks!

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You may find more advice under the "rebuilding" section of the forum. Collections fall off 7 to 7 1/2 yrs after the DOFD (date of first delinquency). I agree w/Relevate that paying this would be low on my list of priorities. Others may disagree on moral grounds. You could try to PFD (Pay for delete), but if it's due to fall off this year, it might not make any difference on your credit report.

I would put the money towards your new credit card and then be sure you PIF every month. Some people erroneously believe that you need to carry a balance to "build credit." That's completely untrue. Since you'll have a low CL (credit limit), you might want to use the card minimally, or for some monthly recurring charges. Then PIF every month.

It would be a good idea to open a second TL (tradeline). Since your cash flow is tight, you could open  a secured/"passbook" loan with your local bank or CU. Each has their own policies about how they do this. But in general, you deposit a sum (let's say $1000). Then you borrow back 90% of it ($900). Each month you make a payment, either interest alone (which is minimal on this type of loan) or payment and interest. If you do this, be sure to confirm that they will report this to the Credit Bureaus, since they usually don't report this type of loan.

This is how I started my rebuilding and it helped tremendously. The loan officer at my bank suggested that I open a second loan somewhere else, which I did. Having 2 TLs building history as the same time was really key. Only one TL would not have been nearly so helpful because many banks and CUs look for at least 2 open, positive TLs.

One of the benefits of doing the secured loan vs a second CC is that your cash flow isn't affected as much, so you can have a larger loan amount, which is also helpful for future credit.

[xdunlapx]

Well I don't have a bank account. But I'll see about getting a second secured card. I will deposit more money onto my current secured card, I think that would be a wise choice. 

My first deliquency was in 2008 for my credit card that went to collections. So it'll drop off late next year then, so yeah I am not going to worry about it then. I just hope they don't blacklist me. But it won't be the end of the world if they do. There are plenty of other banks around that I could get credit from if I need to. 

Thanks for your help guys! If I have more questions I'll post in the rebuilding section of this forum. Thanks!

[Cleanmachine]

It should be noted that the Statue of Limitation depends on your State Consumer Protection Laws.

I have to admit I am not sure what you are trying to accomplish.

The debt will not fall off your report next year, since you stated your last delinquency was dated in 2008.

BOA or some Collection Agency can still go after you for payment.

[xdunlapx]

I just want to start rebuilding my credit. Since the accounts are so old are they worth paying? How is it affecting my score right now? I want to move forward from my past credit issues and I thought that paying them off would help. I really have no clue about how to fix my credit and don't really know in depth how collections accounts affect my credit other than it hurts my score.

I do think I should at least pay my old checking account off. That won't drop off till 2015. I found my credit reports that I ordered in May of this year and it lists more accounts than does the one credit report I have that is recent. But I'm getting a secured card (it should mail out this week, I HOPE!) and I'll get the CreditInform service for free as long as I have that secured card open and active. It's a Capital One secred mastercard.

I just want to fix my credit so I can move forward and build it up. I'm just looking for advice.

[trumpet-205]

If you owe something, you should pay it back. It is a basic principle.

Now CO usually disappear from credit reports after 7 years from oringinal debt date. CO cannot be reaged.

You need to consult your state SOL to determine your SOL. Be advised that even when you past SOL collection agency can still attempts (still harassing you) to collect money from you. Collection agency just simply cannot sue you to collect debt.

[xdunlapx]

Ok thanks for the help I'll pay them off. I figured I should anyway. It's just been so long since i've had any amount of money that I hadn't even thought about paying them off. I figured I'd never be able to. But now that I'm getting a sum of money I should pay them off. If I didn't save any of hte money (I woulnd't be able to if I pay them all off) I wouldn't be able to buy my required software for college. But I may not need to worry about that anytime soon, other than MS Office.

Thank you fo ryour help.

[jsucool76]

I think this list to be accurate about the SOL on debts, if you're curious.

Also 7 years from 2008 would be 2015. not 2012.