To pay or not to pay

Anonymous · ‎05-11-2017

Hi There,

Back in the summer of 2012, I was a disgruntled customer with one of those huge cellphone companies that everyone hates and walked away from a $200 bill, thinking "ha ha ha, I ain't giving those a@#$%s any more of my money!" Notices came and went, first from the company and then a collection agency, but I was resolute in my principles! No mutli-billion dollar behemoth needs my $200...

So I checked my credit yesterday. My score was 679 or 697 and there was one derogatory note on it from said Collection Agency (which, on a side note, made me think: "what about all those parking tickets I ignored over the years?").

The $200 bill was for July 2012, and in December 2016 it was posted to my cedit score as a derogatory comment (pardon me if I'm getting the terminology wrong).

So some questions:

1. A derogaory comment has a lifespan of 7 years, correct? So it'll die and go away from my credit in 2019, oui? Or is it from the date it was posted to the credit report, which was Dec 2016, meaning 7 years from that?

2. If I dispute the claim, is it removed from my credit score while being disputed? How long does settling a dispute take? If I dispute it will it disappear until 2019, or sometime close to that? (Granted, just between you and me and internet anonymity, I fully recognize the bill and it's accurate: I didn't pay and walked away cause they SUCK. And my animosity towards collection agencies is almost as rancid as my animosity towards multi-billion dollar telecom corporations, though I am surprised there's no outrageous charge from the Collection Agency tacked onto it).

3. If I pay the frickin' $200, how soon will it go away from my report and how will my score rise?

I am currently content with a score of 679 or 697, though the blossoming young adult in me is wondering if my childish resolute side is just being petty.

Thoughts? Comments? Lessons?

Thank you for reading...

Anonymous · ‎05-11-2017

Paying a collection will have zero effect on your FICO score -- in fact, paying it can sometimes hurt your score if they decide to re-age it. Happened to me once, many years ago. Debt was due to disappear in a year, I paid it, then they re-aged it to 7 more years. Score plummeted.

If you can negotiate a PFD in writing, then pay it just to delete it early. I never pay CAs or JDBs without PFD. If it's the OC, do a PFD if you can.

rmduhon · ‎05-11-2017

Ultimately it's up to you. Either way the account will fall off in 2019. Who is the OC and CA?

Anonymous · ‎05-11-2017

They cannot re-age a collection. It will fall off at the seven year mark. The only situation where I think they might be able to do so is if you do not settle for a smaller amount and then start sending them smaller payments as part of a repayment plan with them.

If you leave a collection alone, unpaid, it can be purchased by a new lender and then appear "new" in the scoring. This is not the same as re-aging, because though it's a recently updated collection in FICO scoring, it will still disappear seven years after the first delinquency that you had for the original account they're trying to collect on.

I recently had a collection get purchased and start updating monthly again, right in the last year! That said, I think if you have an old collection, it's better for your FICO score to just not pay it or contact the collection agency at all. But don't ignore a collection that's still within the statute of limitations for your state. That means they could sue you if the amount is worth it to them.

Also, on the off-chance you live in New York state, a paid collection falls off five years after the first delinquency, not seven. You do have to call the bureaus and request its removal.

Anonymous · ‎05-12-2017

Thanks everyone for chiming in.

Is it just me, or is the summary so far inconclusive?

That said, in case it matters:

I'm in Washington state. The Collection Agency is Enhanced Recovery Group, and the original bill was with AT&T. The amount owed is $210 from Ju;y 2012.

Please let me know if that makes a difference at all in advice on what I should do.

Sincerely!

LQA

rmduhon · ‎05-12-2017

AT&T normally changes CA's about every 6 months. Keep an eye on your reports and if ERC falls off call AT&T and pay immediately. That'll keep the account from going to a new CA and being re-added to your reports.

Anonymous · ‎05-13-2017

@Anonymous wrote:
Hi There,

Back in the summer of 2012, I was a disgruntled customer with one of those huge cellphone companies that everyone hates and walked away from a $200 bill, thinking "ha ha ha, I ain't giving those a@#$%s any more of my money!" Notices came and went, first from the company and then a collection agency, but I was resolute in my principles! No mutli-billion dollar behemoth needs my $200...

So I checked my credit yesterday. My score was 679 or 697 and there was one derogatory note on it from said Collection Agency (which, on a side note, made me think: "what about all those parking tickets I ignored over the years?").

The $200 bill was for July 2012, and in December 2016 it was posted to my cedit score as a derogatory comment (pardon me if I'm getting the terminology wrong).

So some questions:

1. A derogaory comment has a lifespan of 7 years, correct? So it'll die and go away from my credit in 2019, oui? Or is it from the date it was posted to the credit report, which was Dec 2016, meaning 7 years from that?

2. If I dispute the claim, is it removed from my credit score while being disputed? How long does settling a dispute take? If I dispute it will it disappear until 2019, or sometime close to that? (Granted, just between you and me and internet anonymity, I fully recognize the bill and it's accurate: I didn't pay and walked away cause they SUCK. And my animosity towards collection agencies is almost as rancid as my animosity towards multi-billion dollar telecom corporations, though I am surprised there's no outrageous charge from the Collection Agency tacked onto it).

3. If I pay the frickin' $200, how soon will it go away from my report and how will my score rise?

I am currently content with a score of 679 or 697, though the blossoming young adult in me is wondering if my childish resolute side is just being petty.

Thoughts? Comments? Lessons?

Thank you for reading...

If you know that the information is correct on your report, it is disingenuous to dispute it, only for it to come back verified. If you are financially able to do so, why not just pay the collection off. If for whatever reason you might in the next 2 years have an application go to manual review, then it will look better to have a paid collection rather than unpaid one. If the account reports monthly, then its presence will continue to keep your scores from moving past a certain level. Also, there is a sense of relief and satisfaction to know that the collector can no longer bother you about your unpaid debt.

Anonymous · ‎05-16-2017

Thanks again everyone for chiming in!

Not to complicate things, but I was doing some research on ERC in the off chance I would be convinced to just pay up, and I found this quote from a post made in Feb 2017 (searching ERC should lead you to it if you want to read the whole thing).

Author had similar issues regarding an old cell phone bill, ERC, and his credit score. Author said: "I checked the SoL on cell phone debt and its 2 years and I saw somewhere that ERC lost its reporting priviliges somewhere so i disputed these on all 3 CA's and guess what....." All 3 CA's cleared the note from their credit scores.

So,

1- Is that true about the Statute of Limitations regarding cell phone debt (and are cell phone bills the same as debt?)

2- what does "lost reporting priviliges" mean?

3- How do I dispute things directly with Credit Agencies?

Thanks again!

Anonymous · ‎05-17-2017

I'm new to the site and still learning on the acronyms... what is PFD?

Anonymous · ‎05-17-2017

@Anonymous wrote:
I'm new to the site and still learning on the acronyms... what is PFD?

Pay for Delete. It's where you contact a collection agency and offer to pay the collection in exchange for a deletion. You can also (Which I have had success with) is call the original creditor and request them to withdraw the collection if you pay them directly.