Let me begin by clearly stating that I am NOT an advocate of people not paying their bills. You made a purchase of a good or service you have an obligation to pay. That said, people very easily can run into a financial brick wall. Unexpected things happen in life and while we had every intent to pay our bills we simply do not have the means due to whatever unexpected thing has gone wrong. While we are a credit repair company, we do know that some of you just need a little advice and education, so we’ve provided some tips here for you.
The creditor has a choice, you should contact them, tell them what is going on and some of them will work with you and take whatever you can afford each month. As long as you pay that – they leave you alone, some will not even report anything to the credit bureaus.
Some creditors, typically the ones that have CEO’s making millions of dollars are simply heartless. They do not care. They want their money or they are going to turn that debt over to a collection agency who will hound you mercilessly trying to collect a debt. First – know that you have rights. If you are getting phone calls at home, work, etc. simply write them a letter demanding they “cease and desist all phone calls regarding any matters they may have with you.” Make sure you write that they have permission to contact you via U.S. Mail ONLY. If you tell them that they cannot contact you at all then they may feel they have no choice but to sue you. So let them mail you all they want. But no phone calls. This is Federal law, upon receipt of that letter if they call you the Federal Trade Commission will fine them $1000 per phone call. Send the letter certified so you have proof they received it.
Once in collection, a few years go by, and you are in better financial condition. Should you pay the collection on your report? I will just give you facts from the perspective of the credit bureaus and FICO score. You will ultimately decide how to play it.
1. If you pay it the negative trade line will still remain on your credit report for 7 yrs. 6 months. So score wise no real benefit to paying, won’t help your score.
2. What is the statute of limitations for being sued for a debt in your state? Some state its 3 years, some more. Can’t be sued, not much they can do but send you letters.
3. If you are sued – you simply call the law firm and settle out of court for, typically, pennies on the dollar. No harm, no foul.
4. If its been sitting there for 4 or 5 years its dropping off at the 7 yr. mark from THE DATE OF FIRST DELINQUENCY WITH THE ORIGINAL CREDITOR. NOT THE DATE ON CREDIT REPORT!!
So there you go. Merry Christmas and Happy New Year!