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Collection Agency’s Obligation to Remove a Paid Account

Reader’s Question

I have read on a couple of websites that asking a collection agency to delete an account once your willing to pay it in full does not mean that it will happen. How do you work around that once you’ve paid it off and they do not remove it. Is it also true that paying on an account that is old refreshes the date it is reported as bad?

Response

Hi [name removed] -
Good questions. While it’s true that collection agencies are under no legal obligation to remove the account once you’ve paid it, generally the collection agencies are only concerned with one thing: getting paid. They do not care about your credit score. In most cases, if you state in writing that you will pay the account in full if they agree (in writing) to remove the collection entry from your credit report, they will comply.

The key is to get everything in writing. Collection agencies do not want to go to court anymore than you do (regardless of what they say). Therefore, if a written agreement is established (i.e., pay in full for removal), its very unlikely they will fail to remove the entry. If you don’t have everything in writing, all bets are off and they won’t take the time to remove the entry.

Regarding your last question: Although rare, resuming payment on an old account can refresh the date. However, this is no reason to put off paying on an old account –if the date is reset, in most cases it’s very easy to get this removed by simply disputing it as inaccurate.

Hope this helps,
Ryan

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Deal with original creditor or collection agency?

Reader’s Question

Dear Ryan,
I’ve have charge offs on my credit report that are about 3 years old, would it be better to try and fix them with he original creditor or the collection agency ?

Thanks (name removed)

Response

Are they paid? If not, are you looking to pay them? If they are not paid, do not deal with the collection agency! Contact the original creditor and negotiate payoff. There is no advantage to working with the collection agency. Unless the account was out right sold to the collection agency, it’s most likely that the original creditor is simply using the collection agency to collect the debt. Therefore, they will also still work with you directly.

Ryan

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Remove Collection Account Without Hurting Your Credit Score

Reader’s Question

My Girlfriend just got a letter from a collection agency, with an account number and the amount of $150 dollars that is owed. She never recieved any mail or phone calls regarding this amount from the original creditor, and does not even know the date or original purchase. She believes the claim could be real, because she did cancel a few credit card accounts in the past..but does not know who it could be. Is there a way to pay that amount off without it going to the collection agency or hurting her perfect credit score?
Need help asap, so any advice will be appreciated. Thank You.
Jay

Response

Hi [name removed],
First you need to get your girlfriend’s current credit report and see if the account is being reported as a collection. It’s very possible that it is since she was contacted by a collection agency. Nonetheless, it’s very important to know if it’s on her credit report because it will dictate how the situation should be handled.

If it hasn’t been reported yet, you need to have her contact the collection agency right away via mail. Do not deal over the phone with these people. Write a letter that states you will pay off the collection in full if they agree in writing that the account will not be reported to the 3 credit reporting agencies. Also, in the letter make sure she doesn’t admit the account is hers. Send everything via certified mail.

If the account has already been reported to the credit agencies (more likely) then she needs to do two things.
First she needs to write a debt validation letter to the collection agency. These letters should be very simple. Simply ask that they verify the following information:

• The name and address of the original creditor.
• Detailed information showing how the “Balance Owed” has been calculated.
• Proof that the statue of limitations as defined by the State of [your state] has not expired.

Now, this next step is very important and needs to be done right after the letter is sent (like the next day). Dispute the collection account with ALL 3 of the credit agencies. Dispute it as “no knowledge of this account”. Search for “dispute” on my blog to see my post on how to do this.

The reason why you want to dispute it right after you send that letter is because the Fair Debt Collection Practices Act forbids the collection agency from responding to any requests regarding the debt while you have requested that the debt be validated. Therefore, when the credit agencies contact the collection agency to verify the account that was deputed, by law, the collection agency can’t respond and the credit agencies will be forced to remove the account from your girlfriend’s credit report.

This technique works extremely well.
Good Luck
Ryan

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