Credit card/collection agency advice

[MuffinMan]

All right now that I'm I'm making semi decent money I can start to think about digging out of this debt hole my-ex wife and I put myself in. I have two credit cards that are current and I am paying on, both with APR's in high teens and I have 3 accounts that went to collection agencies about a year ago. I have about $800 over my minimum payments on the current cards to plow into this stuff.

Should I work on paying the current cards off and then tackle the accounts in collection? This is what I've been doing the last few months btw because I assume accounts in collection are not charging interest. Or are they? I refuse to call them to ask because I'm sure they'll want my address and phone # and I like them not knowing where I am. My other option is obviously to pay the minimums on the current cards and go at the collection accounts first. Which course of action will A) have me paying the least amount of interest/fees in the end B) make my credit look like the best it can be in the end and C) the soonest I can have it looking a little better. A, B, C are in order of importance.

[Abagadro]

Those delinquent accounts are indeed accruing interest and likely at some horrendous default rate.  What stage are those collection accounts in? Have they filed a collection action or are they just in the "bug you until you pay" mode?

You didn't give the balances, but if it were me this is how I would handle it: I would keep paying the minimums on the current cards and then save up a chunk that represents around 30-40 percent of the balance of one of the delinquent cards. I'd call up whoever is collecting on that one and offer to pay it off for the percentage as full payment on the card. Ask THEM what the minimum lump sum payment would be to satisfy the obligation as it is often lower than anticipated. I'd try my best not to let them intimidate me about how they are going to fuck with my life and would just say I wanted the bottom line figure on what it would take to get rid of it. I'd make sure that this is clear that the payment is being made to completely satisfy the outstanding balance and get their agreement in writing that this will be the case before sending the money.  Hopefully I'd get a good discount or at least get a target for what I'd need to pay it off (i.e. would they waive interest etc. etc.). Rinse and repeat with the other cards over time. There is some risk in tipping them off as to where I am but they probably know anyways as skip tracing is pretty good these days and from my experience more collection places will take money in the door with a discount over trying to chase someone around. This is at least my experience from back when I used to do collections work for credit card companies 10 years ago. Things may have changed.


THIS IS GENERAL INFORMATION ABOUT HOW TO DEAL WITH DEBTS AND SHOULD NOT BE TAKEN AS LEGAL ADVISE ABOUT YOUR CURRENT SITUATION AS WE HAVE NO ATTORNEY-CLIENT RELATIONSHIP. YOU SHOULD CONSULT AN ATTORNEY ABOUT YOUR INDIVIDUAL CASE.

[SnakeCharmer]

I THINK this is how it works:

First, man up, contact the collection agencies and see what can be worked out.  If they are in collection, it is adversely affecting your credit rating.  With your credit rating getting hammered, the accounts that are not in collection are subject to having their interest rates jacked up by the issuer.

The longer this drags out, the more they're going to charge you in penalties or interest.  Pay the mins on the ones that are in good standing until you can get the ones out of collection.  See what you can do to negotiate with them for a lump sum payment and removal of collection from your credit record.  They have all the power, so you're going to have to do some ass kissing.  I don't believe they can call you at work if you tell them not to.  If you're worried about harrassment, get a cheap prepaid cell phone, turn it off, and give them that number.  If they want your address, they can get it without any consent from you, so dont worry about trying to stop that.  

Once you get the ones that are in collection paid off, start working on the others next.  Go lowest balance first, to highest balance last.  Cut the cards, but don't cancel them as this can be bad for your credit as well.  Any card that you DO have that as any available balance for emergencies, keep.  But make it hard to get to to keep out of tempation of using it.  Freeze in a block of ice, bury it in the back yard two feet deep.  Whatever.  Just don't use it unless you absolutely HAVE to.

[Abagadro]

If you want to read up on what your rights are concerning getting contacted/harassed research the Fair Debt Collection Practices Act.

[Lantyssa]

You may want to consider talking with a Consumer Credit Counseling Service in your area.  One of my old girlfriends used them to consolidate and pay off a massive amount of debt she accrued before getting into school.  The idea is they talk to all your creditors and give you one payment you can handle so that they get their money and you actually get a means of paying it off.

I'd research anyone you want to talk with first though, since you'll likely be giving them sensitive information.

[Nerf]

When a debt in collection hits 7 years, do I just need to report it as invalid and give that as a reason to get it off, and what are the chances they will try to fuck with the dates?  I had a roomate bail on me when I was 18 and the apartment complex went after both of us for full liquidated damages of the lease.  He ended up tossing them something like $300 right out of the gates and they hit me with a $2k+ collection (never even knew about it til I checked my credit a year or so later, nothing in the mail, no bills, etc).

Are there any avenues I can take to get this off sooner, or is my best bet just waiting another 7 or so months until it hits 7 years?

[Salamok]

Sometimes after just a few years of non action creditors will stop actively reporting bad debts and if you challenge them on your report and they do not respond the items will be removed.  If you are in this situation I would say it is a good idea to challenge all bad debt on your credit report on a yearly basis.  There used to be an awesome forum called the art of credit that offered excellent advise on self repairing your credit, most creditors do not follow all the laws and regulations to the letter and in some cases in addition to getting the badness removed you can actually seek reparations.  If you are desperate for a quick solution I would try and locate a legit credit repair service.

If your bad debt isn't that old, your credit has been trashed and you can pay it off then I would call and negotiate a settlement.  Keep in mind once you start paying on a bad debt many times this will start the clock ticking all over again so it will be on your credit for 7 years from the time you acknowledge the debt by making a payment, I do not think this is entirely legal but it is how the junk debt buyers operate.  I was in this situation and by the time I was financially able to start paying off my bad debt 4+ years had passed and all my debt had been sold for pennies on the dollar to a bunch of junk debt buyers.  I opted to just wait it out and ignore them (score now above 730 and was below 500), I did have some ethical qualms about this but the fact was I had less than 3 more years to go for this stuff to fall off and paying it would have turned that 3 back into 7 (not to mention I wouldn't even be paying the people I incurred the debt with).

If your debt is still owned by the original creditors you might be able to convince them to change the status of your derogatory items to reflect "paid as agreed", if you can negotiate that be sure and get it in writing and reflect the arrangement on the actual check in the memo section (this documentation can come in handy when asking the bureaus to remedy your report).  Once you are in a junk debt buyers hands there is nothing that they can do to modify what was reported by the original creditor.

[NowhereMan]

THIS IS GENERAL INFORMATION ABOUT HOW TO DEAL WITH DEBTS AND SHOULD NOT BE TAKEN AS LEGAL ADVISE ABOUT YOUR CURRENT SITUATION AS WE HAVE NO ATTORNEY-CLIENT RELATIONSHIP. YOU SHOULD CONSULT AN ATTORNEY ABOUT YOUR INDIVIDUAL CASE.

Myabe you should stick that in your sig

[tazelbain]

[HaemishM]

Collection agencies these days will hold onto your debt for a while. Often times, after 6 months or more of mailing you and/or calling you without your response they will either: 1) sue you (or arbitrate) which if you don't pay only gives them the eventual right to garnish your wages or 2) offer you a settlement, sometimes as much as half off. Do like Ab said - save up a big chunk and wait for the settlement offer or contact them to make a settlement offer.

Also, remember this: your credit rating can be utter shit and someone will still give you money for almost anything (except maybe a house) - you'll just have to pay a possibly insane (and probably immoral) amount of interest. Collection agencies will try to scare you by threatening to destroy your credit rating. Other than the house thing, this really has very little teeth.

[NiX]

Do what Ab said. I'm just getting finished wrapping up all my bad debt and I wish I had just saved up and negotiated, mind you they all pretty much offered 30-50% off right off the bat. They work on commission, so the faster they get you to pay, the faster they walk away with their cut.

One thing to keep in mind: Check to make sure you're paying the right people. There are some shady agencies out there that don't legitimately buy your debt, but try to get you to pay.

[Merusk]

In addition to those agencies NiX mentioned  is another thing I'd heard on an NPR report a few months ago.  If you DO settle the debit, make sure you get in writing that it's for the absolution of the whole debit.   Some agencies will settle a cut, then sell the remainder to another agency.

[Minvaren]

(disclaimer : I work for a collection agency but am not a collector myself.)

Without knowing more about your exact situation (DTI ratio, status/ownership of accounts in collections, balances, etc..) Abrogadro gives the best general advice.  Keep your accounts in good standing that way.  Ring up the collection agencies 2-3 days before the last day of the month with funds in hand in order to take advantage of budget-hitting deals.  Get something in writing and signed that they will both accept your desired offer as settlement-in-full AND not 1099 you for the amount of the forgiven debt before paying.  Make a copy of the canceled check used to pay said amount in case they want to play hardball later.

Also, I had to comment on this...

Once you are in a junk debt buyers hands there is nothing that they can do to modify what was reported by the original creditor.

While technically true, debt buyers will sometimes report to the credit bureaus independently.  They also have been known to pay $1 on your account to reset the statue of limitations.  Good luck proving that without a lawyer familar with this sort of thing, and/or a source on the inside.

[angry.bob]

Depending on how much you owe, the best thing you can do is go see a lawyer about declaring bankruptcy. Declare bankruptcy and keep a close eye on your credit reports to make sure the depts were reported as being cleared that way instead of as write offs or whatnot. Bankruptcy is the best thing ever, or at least it used to be. There's practically no stigma attached to it anymore, it's not like it's uncommon right now, and after about 7 years it'll be like it never happened. If you do go that route, learn your lesson and never get more than one credit card with about a $2000 limit.

[Abagadro]

The new BR laws aren't as kind as they used to be.  It's something to explore but you need to be careful that you don't make enough or have enough that you will be bumped into a 13 where you'll spend as much as a workout while having the BR on your record.  Even if you stay in 7 you could draw a hardass trustee that would liquidate some of your assets.  It all really depends on what you own and how much you owe.

[Salamok]

IIRC bankruptcies stay on your report for 10 years not 7.  If all you have is unsecured credit card debt you would probably be better off just not paying it than filing BK over it.  Also to file BK now you need to go through credit counseling.

[Strazos]

While we're talking bad collection stores, I have one for you...thoughts appreciated:

Go to the ER Aug 2007. While eligible and enrolled in my health insurance plan, I did not have the physical card on me (not received yet). ER takes me in, and does their thing. I forward the hospital my insurance info once I am able. I start getting bills - one from the hospital, one from a Radiologists LLP or whatever. Insurance chipped in their portion, and I pay the balance; the hospital bill was about $450. I consider the matter resolved.

Spring 2009 rolls around. I'm in the application and clearance process for my current job, and what happens? A collection action shows up in my mailbox and credit report, the same week my prospective (now current) employer pulls my full credit report. I'm not happy about this.

Call up the shady company, tell them I have no idea what the charge is for. They say it's for my hospital stay, which I admit to. I say lol, I paid, that try again. They insist the charge is valid. I ask to see documentation of the charge, and they simply refer me to their correspondence I have in my hand; I have no idea who this collection agency or creditor is. I indicate that I have no intention on paying the bill without a hell of a lot more proof than their simple say so, at which point the guy turns hostile. After a bit of a run around, I get a hold of a supervisor, who actually takes the time to explore the situation. Turns out, it's a bill from the ER doc assoc...why the fuck the docs charge separately, I have no idea (apparently this is normal; I had never been to an ER in my life). Still kind of funny how the other 2 sent me their bills, this one did not. Anyway...

Call up my insurance company, because the doc charge seems VERY high (have family in the health industry). Turns out these guys never submitted the bill to my insurance company, which they have attested to in writing. I go to the original creditor, which outsources their billing to another company (not helpful, lots of calls to track people down). Eventually, we figure out who to talk to, and they just say "Oh, we charged that account off." I kindly ask them to un-charge-off the account. They protested, until I told them what job I was applying for, and how very unhelpful it will be if this erroneous charge on my credit causes any problems. They insist that they will take care of it, and get the charge off of my credit. As I got the job I was applying for, I didn't bother to check up on it.

It's now Spring 2010. I just got another piece of correspondence from the collection agency a few weeks back. I promptly ignored it, as I consider the charge to be invalid, and I'm not losing any sleep over it. Quite frankly, I don't have the time during the day to play games with these people, and I've already done most of the leg work for them.

Advice? If this drags on until next summer, I'll be moving out of the country. At that point, I wish them good luck in trying to track me down.

[01101010]

While we're talking bad collection stores, I have one for you...thoughts appreciated:

Go to the ER Aug 2007. While eligible and enrolled in my health insurance plan, I did not have the physical card on me (not received yet). ER takes me in, and does their thing. I forward the hospital my insurance info once I am able. I start getting bills - one from the hospital, one from a Radiologists LLP or whatever. Insurance chipped in their portion, and I pay the balance; the hospital bill was about $450. I consider the matter resolved.

Spring 2009 rolls around. I'm in the application and clearance process for my current job, and what happens? A collection action shows up in my mailbox and credit report, the same week my prospective (now current) employer pulls my full credit report. I'm not happy about this.

Call up the shady company, tell them I have no idea what the charge is for. They say it's for my hospital stay, which I admit to. I say lol, I paid, that try again. They insist the charge is valid. I ask to see documentation of the charge, and they simply refer me to their correspondence I have in my hand; I have no idea who this collection agency or creditor is. I indicate that I have no intention on paying the bill without a hell of a lot more proof than their simple say so, at which point the guy turns hostile. After a bit of a run around, I get a hold of a supervisor, who actually takes the time to explore the situation. Turns out, it's a bill from the ER doc assoc...why the fuck the docs charge separately, I have no idea (apparently this is normal; I had never been to an ER in my life). Still kind of funny how the other 2 sent me their bills, this one did not. Anyway...

Call up my insurance company, because the doc charge seems VERY high (have family in the health industry). Turns out these guys never submitted the bill to my insurance company, which they have attested to in writing. I go to the original creditor, which outsources their billing to another company (not helpful, lots of calls to track people down). Eventually, we figure out who to talk to, and they just say "Oh, we charged that account off." I kindly ask them to un-charge-off the account. They protested, until I told them what job I was applying for, and how very unhelpful it will be if this erroneous charge on my credit causes any problems. They insist that they will take care of it, and get the charge off of my credit. As I got the job I was applying for, I didn't bother to check up on it.

It's now Spring 2010. I just got another piece of correspondence from the collection agency a few weeks back. I promptly ignored it, as I consider the charge to be invalid, and I'm not losing any sleep over it. Quite frankly, I don't have the time during the day to play games with these people, and I've already done most of the leg work for them.

Advice? If this drags on until next summer, I'll be moving out of the country. At that point, I wish them good luck in trying to track me down.

If its a medical bill, as I was told by my credit counseling agency that I am using to clear up my mess, it will be discharged after 7 years. Not sure how that works but that is what I was told. I however consolidated it into my credit card bills which wrapped into a nice manageable single bill a month that fits in my budget. Now the defaulted student loans I have... yeah those are a completely different beast entirely. Once I can get my epic sword of debt to drop, I will be able to slay that thing outright.

[Signe]

Strazos, almost that exact same thing happened to someone I know - trip to ER, doctors billing separately, etc.  He did some investigating (he's a lawyer) and found that the doctor's practice who billed him wasn't even in business yet and the doctor who's name was on the bill hadn't started practicing yet.  Of course, neither the practice or the doctor knew anything about it.  How does that even happen?  There is so much dodgy shit going on with hospital billing!  Considering the state of mind people are in at times like that, you have to wonder how many people who do absolutely nothing get paid during the course of someone's illness.  My sister, who had serious back surgery a few years ago, found doctors who seemed to have wondered in off the street, simply asked her how she was feeling and left without providing any sort of treatment at all, would send her a bill.  I won't even go into the unethical and illegal hell between doctors, insurance companies, hospitals, funeral stuff, etc. that we endured before, during and after my father died!

[NiX]

Anyone know of any good credit consulting agencies in Ontario (CAN)? Even though I'm pretty much done paying off my debt, it wouldn't hurt to have someone who knows look it all over and check out the release letters to make sure it was all on the up and up.

[Salamok]

Not sure if the rules have changed but it used to be very easy to have medical collections removed from your credit report.  If they do report then they are basically disclosing to the world that you have or had a medical condition and may not be in good health, this violates dr/patient confidentiality or whatever.

In addition to this the FCRA is one of those rare seeming bits of legislation that does not favor corporations.  The penalties it imposes are small (like small claims court small) but the standards it sets for creditors are fairly hard for them to follow.

If you have something on your report that is there in error your 1st action should be to contact the credit bureaus (fill out the dispute form and tell your side of the story). 2nd step would be to contact the creditor but be very wary here as some of these guys are just flat out looking to scam you, I would record the conversation and keep in mind they are likely recording you as well.  3rd step is to find a reputable credit repair agency, maybe call a good mortgage broker and ask who they use for credit repair (a few years ago this service was generally in the $300-$500 range).

If you don't want to go the credit repair route then your absolute best bet is to take the entire fight to registered mail, notify them in writing that you do not acknowledge this debt as yours, ask them to provide proof in writing that you incurred this debt and that you have not paid it.  This is the type of documentation you can provide to the credit bureaus to get them to remove the derogatory item.

Keep in mind in many states it is illegal to record a telephone conversation without the consent of both parties (lucky for me TX only requires single party consent), if you live in one of these states just tell em right up front "For you information I am recording this call".

[Strazos]

I think part of the problem is that while I did receive service from the ER docs, they did not charge me right (never submitted to my insurance co), and then sent the original balance to collections. Rightfully, I should owe SOMETHING, but not the ~$600 they say I do.

Luckily, I don't think I'll really need my credit rating for much of anything for the next bunch of years hopefully.

[schild]

AFAIK credit takes barely any hit due to medical bills. As in, it shouldn't have had any effect on your credit rating.

Ah, here: http://answers.google.com/answers/threadview/id/572644.html

I spoke with a customer representative at Equifax: outstanding medical
bills can affect your credit score, but the impact will likely be
negligible. Equifax is far more lenient regarding medical bills, as
opposed to a debtor who went on a reckless shopping spree and ran up
exorbitant charges they then couldn?t pay.

So, while your score may be affected by outstanding medical bills,
those debts won?t weigh all that heavily against you. According to
Equifax, that shouldn?t have any significant impact on your score and
shouldn?t affect you if you are, say, hoping to get a home loan.

[slog]

AFAIK credit takes barely any hit due to medical bills. As in, it shouldn't have had any effect on your credit rating.

Ah, here: http://answers.google.com/answers/threadview/id/572644.html

I spoke with a customer representative at Equifax: outstanding medical
bills can affect your credit score, but the impact will likely be
negligible. Equifax is far more lenient regarding medical bills, as
opposed to a debtor who went on a reckless shopping spree and ran up
exorbitant charges they then couldn?t pay.

So, while your score may be affected by outstanding medical bills,
those debts won?t weigh all that heavily against you. According to
Equifax, that shouldn?t have any significant impact on your score and
shouldn?t affect you if you are, say, hoping to get a home loan.

Back when I bought m  house in 1988 in New Hampshire, we had to pay some old Medical bills from 1980s that my wife had never paid that had gone to collections due to "some law that allows them to put a lien on the house" according the the bank.

We ended up paying them, but I never looked into it farther.