Many people are really worried when an account goes in to collections, meaning a credit card company has decided to charge off your debt due to non-payment. Sure, now you have two big negative marks on your credit report, but I’m going to make a statement now that may seem counter-intuitive: once something gets to collections, you are pretty much home free!
Much of my reason for making this crazy statement comes from the fact that your protections under the law are dramatically increased when an account goes into collections. Let’s see how.
- It’s pretty hard for the collection agency to build up a good case against you in court if they decide to sue. Read more.
- If they are reporting on your credit report, it’s generally easy to get this off using the debt validation or so-called “623″ method of requesting an investigation from the information furnisher. These two methods are effective because collection agencies do not have documentation adequate enough to support them if you challenged them in court. When a credit card company sells off bad debts, they place them in million dollar packages of debt to be sold on the market to junk debt buyers. No documentation regarding the original debt goes along with this debt when a junk debt buyer purchases the paper.
- It’s very easy to get them to settle for 10-25% on the dollar and also remove the item from your credit report. Our readers do this all the time, it’s called pay for delete in the credit world.
- It’s easy to tell them to just “go away” via your rights in the Fair Debt Collection Practices Act (FDCPA). Under the FDCPA, you can send them a written note telling them you wish no further contact with them and they MUST comply or they are violating the law. This way you call essentially call off the dogs forever.
So while being in collections is not necessarily a good thing, there really is no need to panic. Remain calm and read the information on this site and you will be ok. As a parting tip: here’s another good article on ways of dealing with collection agencies.
Does anyone have any other good tips? Leave a comment!
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12 responses so far ↓
1 d // Aug 1, 2008 at 12:33 pm
kristy - Very valuable info. How about hospital debts? in 2003 by spouse was in & out of hospitals for several months. I signed the “authorize to treat” paragraph in each instance, but REFUSED & crossed out the paragraph stating signor agrees to pay any balance not paid by insurance/any unpaid balance. the hospitals/their collection attys continue periodically to collect these debts from my spouse. do you know anything about these type debts? also, what if I had signed that I would pay bal? Any SOL on medical debts like these? What category do they fall in? THANK YOU KRISTY! d
2 Eugene // Aug 13, 2008 at 5:38 am
When a collector calls tell them to hold on, and play some music thru the phone for them while waiting, then go do your chores!!!!!!
3 Linda Hetrick // Sep 18, 2008 at 9:23 pm
I have read your book and many other books concerning different proceedures on how to “win” with collectors and how to clean up your credit and up your score. Most of my collectors are at LEAST 3 yrs or older. Last year I signed up with a monthly creditoring monitor service and began to “fix” things. I was well prepared to do this, with all my template letters and advice in had. Year and half ago..my average credit scores was about 590, with about 22 creditors. A year and half later, my score is even LESS..about 570..with about 8 creditors. Unbelievable? Well, let me tell you how this happened..yes..some did take theirs off because they couldnt prove they owned the account. NO ONE…repeat NO ONE..and yes I DID do it properly..no one wanted to settle..all I go was nasty letters. What no one tells you, is the remaining crediors, or collectors..are now ‘refreshed’ and want to begin the whole process of harrassing you all over again. Most have only reported to one credit bureau, but almost all, in revenge, would report negative info to ALL THREE in hopes to wear you down. Thats when all my scores dropped. I sure this doesnt happen to just me. I even had one creditor (owed $400) look up my name and address on the internet and contact me AND my relatives, including EX INLAWS. Talk about embarrassing..I havent seen them in 8 yrs. So now someones going to say “get an attorney and sue”. Well, the attorney that I contacted, an expert on collectons, told me ” I should pay my bills”. Period. Guess on attorney pay I could. Sue in small claims? Most are out of state, and the proceedures Ive read about Im not prepared to handle. Call me weak, but I have been to small claims before, and its not a fun time.
This is just what I wanted to share with everyone as to my experiences. When I read and read about how “easy” it is..Im here to tell you that many do nasty things, and get away with it, and we are helpless unless your welling to spend alot of money to get this fixed. I cant.
4 suzi // Sep 20, 2008 at 7:55 pm
I’ve had the same experience. Good Luck and keep going after it . You’ll come out OK.
5 Laura // Sep 24, 2008 at 5:29 pm
I have found all this info to be very helpful. I wasn’t aware that disputing them with the credit agancies refreshed them until it was already to late. Score dropped 30 points. Now I am sending in dispute letters and hope to clean it up. I have three that are with collections and they are *$$holes!!!!! Hopefully my well writen letter (thank you for by the way) will resolve these matters. Best website I have ever come across!!!!
6 Kenn // Oct 10, 2008 at 11:16 am
I have tried for months to get this one collection agency to validate my debt. They will not do it and when I threatened to sue them if they did not validate the debt and remove it from my credit report, they sent me another collection letter and stated that they had complied with the law and reported my debt as “disputed” with the credit bureaus. I don’t understand the information I have paid for from the Credit Inforcenter, because that seems to be their position and the credit bureaus agree. How do I get this unvalidated debt removed from my credit reports?
7 john // Oct 25, 2008 at 4:47 pm
First off great site..I have learned a bunch. I have a question I am being sued by Capital One Bank (USA)N.A., but the accounts in question are from Capital One F.S.B., which is a seperate entity. I have previous statements that show this as the company to send payments too. When this goes to trial it should be dimissed right?
8 Sharon // Oct 31, 2008 at 7:01 am
What about a judgement against me from a landlord? I missed the court date so they went for the landlords side, of course. But the landlord failed to mention in court that he was holding my 650.00 deposit. Can or should I take the Landlord back to court now? It’s been a year?
9 Kristy // Oct 31, 2008 at 7:36 am
Sharon, try out our discussion boards to get a specific answer to your question.
10 Leo // Nov 22, 2008 at 1:09 am
I need help! I had a good credit score for a 21 year old who started. Then I went back to school and took out a school loan, 2007. At work I had a conflicting Schudle and I was paying hourly for my classes, Pilot. I was studing my dream and my job was getting in the way eventually they both excused each other along with all my credit cards. I started working in a dealership, but the economy is not helping at all. I’m worried about a couple of things. First, can I rebuilt my credit and what can I do about collections. I used to pay all my balances in one shot, but I’m very worried about my situation. What are some things I can do to rebuild my credit fast and if I could erase any, or all the negative incuries on my credit. Second, I am afraid of not flying again. Thank you for taking the time to read this.
11 Leo // Nov 22, 2008 at 1:17 am
Forgot to mention a couple of things in my last comment. First of all, awesome website and I have learned a lot from it.
12 Kristy // Nov 22, 2008 at 3:55 pm
Leo, try out our discussion boards to get a specific answer to your question. (Link at top of page.) Thanks for the compliments!
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