The Truth About Paying Collections and Your Credit Score - Do This Instead!
Here is some information you might find helpful in dealing with collection situations, by using the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).
Collection agents must comply with the Fair Debt Collection Practices Act, 15 USC §§ 1692 et seq.
(FDCPA).
The FDCPA regulates the language that collection agents can use in collection letters.
Some of the letters sent by collection agents contain false or misleading information.
Others attempt to confuse you as to your rights.
Due to the legal language in these letters, many consumers are actually afraid to even respond.
If any collection letter you have received violates the law, you may be entitled to sue the collection agency for damages of up to $1,000, plus get back all of your attorneys fees.
It is not difficult to file a small claims suit and generally under $100.
00.
Collection agencies have one goal, TO GET PAID! Consumers, on the other hand, have a different goal, TO FIX MY CREDIT! There is a solution.
When negotiating with a collection agency, always ask for a "Good Pay Rating".
The idea is to get the creditor to report your account after the settlement as "Paid as Agreed" or "Account Closed - Paid as Agreed", not Paid-Settled.
Some creditors may not change the status to "Paid as Agreed".
At least, get the creditor list the account as "Paid".
Since this is an accurate statement on the status of the account, many creditors will agree to this wording.
Of course, insist that the account show "Paid" only, and that all other negative notations (such as "Charge-off," "Repossession," late payments, or "Collection") are deleted at the same time.
A simple "Paid" notation on a regular trade line is neutral and should not hurt your credit.
Only send payment after they agree in writing.
Collection agencies will more readily agree to delete the negative reporting than banks or credit card companies, since the collector can change their reporting, but you remain stuck with the original creditors negative reporting.
Better to negotiate with the original creditor, because the reporting on your "applied for" accounts that primarily determine your credit rating.
Although, I have found, due to the time it takes for these accounts to show up with a third party collector, the original account is easily removed with a general Credit Bureau Dispute.
One 100% effective way to get a collection company to remove the entire account is to catch them breaking the law.
This is where a little back round information comes in.
Each state has its own Collection laws.
Some states actually require a collection agency to be licensed in the state the consumer lives in, not the state the agency is in.
Check your Commerce and Insurance website within your state to view their criteria.
Another law many agencies seem to ignore is the statue if limitations laws governed by individual states.
In general, this is the time allowed for a judgment order.
Some states are 5 years some are 10 or more.
You can also find this information within your states official website.
Remember the law is on your side, and there is always an option.
You just have to find it.
Collection agents must comply with the Fair Debt Collection Practices Act, 15 USC §§ 1692 et seq.
(FDCPA).
The FDCPA regulates the language that collection agents can use in collection letters.
Some of the letters sent by collection agents contain false or misleading information.
Others attempt to confuse you as to your rights.
Due to the legal language in these letters, many consumers are actually afraid to even respond.
If any collection letter you have received violates the law, you may be entitled to sue the collection agency for damages of up to $1,000, plus get back all of your attorneys fees.
It is not difficult to file a small claims suit and generally under $100.
00.
Collection agencies have one goal, TO GET PAID! Consumers, on the other hand, have a different goal, TO FIX MY CREDIT! There is a solution.
When negotiating with a collection agency, always ask for a "Good Pay Rating".
The idea is to get the creditor to report your account after the settlement as "Paid as Agreed" or "Account Closed - Paid as Agreed", not Paid-Settled.
Some creditors may not change the status to "Paid as Agreed".
At least, get the creditor list the account as "Paid".
Since this is an accurate statement on the status of the account, many creditors will agree to this wording.
Of course, insist that the account show "Paid" only, and that all other negative notations (such as "Charge-off," "Repossession," late payments, or "Collection") are deleted at the same time.
A simple "Paid" notation on a regular trade line is neutral and should not hurt your credit.
Only send payment after they agree in writing.
Collection agencies will more readily agree to delete the negative reporting than banks or credit card companies, since the collector can change their reporting, but you remain stuck with the original creditors negative reporting.
Better to negotiate with the original creditor, because the reporting on your "applied for" accounts that primarily determine your credit rating.
Although, I have found, due to the time it takes for these accounts to show up with a third party collector, the original account is easily removed with a general Credit Bureau Dispute.
One 100% effective way to get a collection company to remove the entire account is to catch them breaking the law.
This is where a little back round information comes in.
Each state has its own Collection laws.
Some states actually require a collection agency to be licensed in the state the consumer lives in, not the state the agency is in.
Check your Commerce and Insurance website within your state to view their criteria.
Another law many agencies seem to ignore is the statue if limitations laws governed by individual states.
In general, this is the time allowed for a judgment order.
Some states are 5 years some are 10 or more.
You can also find this information within your states official website.
Remember the law is on your side, and there is always an option.
You just have to find it.
Source...