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Collection Accounts-if I pay it will be get deleted?

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Outside of bankruptcy and foreclosure, arguably the biggest black eye that you can have on your credit report is a delinquent debt that went to collection accounts. These accounts are some sort of debt that you fell behind on, then just let escalate to the point where a debt collector took it over. Collection accounts can cause your credit score to take a huge hit. Worst of all, they can stay on your credit report up to seven years from the time you fell behind on payments. But if you pay off the delinquent account, it will be removed from your credit report, right? [/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_code admin_label=”Youtube Code”]<iframe src=”https://www.youtube.com/embed/x3JAV0teBEQ” width=”560″ height=”315″ frameborder=”0″ allowfullscreen=”allowfullscreen”></iframe>[/et_pb_code][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”This is a common misconception ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Wrong. This is a common misconception that many people have. But regardless, it’s still crucial to settle any outstanding accounts that have gone to collections. We’ll explain why in this post.

So What Good Is Paying Off A Collection Then?

We know what you’re thinking – if settling a collection account won’t get it removed from your credit report, then what good is it to settle it? Settling is important for two reasons:

  1. It prevents you from potentially being sued by the debt collector, which can result in the court ordering wage garnishment, putting a lien on your properties or freezing your bank account until the debt is settled. Lawsuits are headaches that you don’t want to have to deal with, trust us.
  2. Settling a debt can actually help your credit score over time. That’s right, while the collection account may stay on your report for up to seven years, the account will be marked as paid. As this information on your credit report gets older – and you maintain good consumer habits – your credit score will gradually improve the closer you get to that magic seven-year mark.

 

Is There Anything I Can Do To Get It Removed?

Yes, but you must know that in the end it’s still likely that the collection account – even if it’s paid – remains on your credit report. If you really want to do your due diligence and kick the tires on every option to get collection accounts removed, contact a qualified credit repair company to help you in your cause. These sorts of companies have the know-how and expertise to work with both the credit bureaus and creditors themselves to permanently remove paid delinquent accounts – and well before the seven-year removal period.

 

The best way to have collections removed from your credit report is to make sure that you never have an account go to collections in the first place. Do this by making smart borrowing decisions, paying all of your bills on time and practicing good debt and financial management techniques.

 

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If you default on a loan and fail to pay or work out some sort of arrangement with the creditor within three to six months, things have the potential to get really sticky. You may be hounded day and night by the creditor seeking information on the status of the payment you owe to the point where their tactics may be considered illegal. Your creditor may also sue you and take you to court for the money that you owe – and that’s where things have the potential to get even more tumultuous. According to a May report from Prorepublica via Boing Boing, debt collectors often prey on minority and underprivileged groups, filing lawsuits in states with low filing fees in an effort to recoup as much as possible from the people that owe. It’s further proof that the debt-collection machine is ruthless, and this post is designed to take a closer look at just how brutal it really is.

Inside America’s Debt-Collection Machine

So just how appalling is the debt collection process in America? Just take a look at these takeaways from the Prorepublica piece:

  • In 2008, the state of New Jersey heard about 140,000 debt collection cases. Almost all of these cases were filed against African Americans that were unable to afford legal representation. These 140,000 cases were up exponentially from 12 years prior, when only about 500 cases were heard.
  • Most of the debt collection cases were filed by what’s known as “vulture capitalists,” or those who purchase the debt on the cheap and quickly file a lawsuit in a predatory manner against those they know are the easiest victims.
  • Medical debts are among those that are most sought after – and some of the victims that debt collectors and their lawyers have gone after for payment include active-duty soldiers.
  • Capital One was discovered to be the leading U.S. bank when it comes to filing lawsuits against its own customers.
  • The debt collection process for many lenders is highly predatory. It not only involves purchasing debt on the cheap, but filing suit in the states were it’s most affordable to do so to keep their own costs down. It’s a low-risk, high-reward type of proposition.
  • Creditors are always represented by legal teams in court. In 2013 New Jersey, a whooping 97 percent of defendants were without legal counsel.
  • When collectors are given access to and permitted to tap into a consumer’s bank account to seek repayment, the average amount that they net is a measly $350.

Not only does Prorepublica shed light on a damaged debt collection system in need of reform, but it also serves as a good reminder on why you should do your best to avoid financial issues at all costs. Not only can such issues hurt your credit score, but you may also find yourself on the wrong side of the predatory ladder.

Credit Repair Mistakes

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Online Credit Disputes – Top reasons to stay away.

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Top Reasons To Write Your Disputes

Reason #1:- As most of you know, one factor you have on your side when disputing credit is time. The legal thirty-day limit is not a lot of time for a credit bureau, creditor, or collection agency to properly investigate a dispute. The Credit Bureaus online dispute system is set up in such a way that when you use it, it makes their job not only that much easier but cost efficient. The information you put into their limited dispute fields falls right into their electronic verification system. The online dispute system is making the process easier for the credit agencies therefore cutting down your chances of deleting the record drastically.

Reason #2: Zero Paper Trail: Any good attorney will tell you that “documentation beats confrontation”. By challenging something online you do not have a paper trail of the correspondence. This does not help you when the response you receive is not favorable and you need to challenge it again.

Reason #3: When the FCRA was amended a few years ago a few provisions were added in for our friends (me being ironic) at the credit agencies called “Expedited Dispute Resolution” Section 611a(8) the on-line dispute system. See below….

“…the agency shall not be required to comply with paragraphs 2, 6 and 7 with respect to that dispute if they delete the tradeline within 3 days.” You are probably wondering what this means so let me explain….

Paragraph 2 requires the CRA to forward your dispute and all related documentation you provide to the furnisher. This rarely happens and is a violation of the FCRA. This is additional ammunition that we can use to challenge something.

Paragraph 6 requires the CRA to provide you with written results of the investigation.

Paragraph 7 requires the CRA to provide you with the method of verification on request from the consumer.

Have you heard of something called a “Soft Delete”???

The Credit Reporting Agency (CRA) can delete a disputed trade line for 30 days, then, the trade line can reappear when the furnisher (creditor or collector) reports it again in the next cycle. That is because the CRA is not required to tell the furnisher you disputed it thanks to section 2 being omitted. This is sometimes called a “soft delete” and it is not permanent. This can be a major shock right before a mortgage refinance or purchase closing for many consumers when their credit is pulled right before a closing.

In addition, the consumer loses their right to request a “Method of Verification” (MOV) so you lose this powerful tool in the dispute process thanks to Paragraph 7 being omitted.

As always feel free to contact our office with any questions regarding the prospect of repairing your credit.

Nikitas Tsoukalis, President

Key Credit Repair

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