Don't make a partial payment on an old debt
unless…
Part 14:
As part of series of articles (blogs)
regarding Credit and Credit Score, here we
go:
Disclaimer:
Every effort has been made to make these
articles as complete and as accurate as
possible, but no warranty or fitness is implied.
The information provided is on an “as is” basis.
The author shall have neither liability nor
responsibility to any person or entity with
respect to any loss or damages arising from the
information contained in this book.
The author is not engaged in professional
services. If professional advice or other expert
assistance is required, the services of a
competent professional person should be sought.
Don't make a partial payment on an old debt
unless…
Partial payments can restart the time period for
when you can be sued and also restart the time
period for how long the negative information
continues to stay on your credit report.
Example: Let’s say you had a debt in June 2010
for the amount of $1800 and you could not pay
it. After several attempts, finally the creditor
sold and assigned your account to collection
agency “A”. Collection Agency "A" tried for
several months, but could not get hold of you.
They sold their accounts to collection agency
“B”. Now (in July of 2013) collection agency “B”
is calling you every day and leaving you
messages. You are tired and wondering if you
should talk to the collection agency and resolve
the issue.
Scenario 1:
You ignore them, don’t talk or communicate with
them and don’t send them any money at all.
Consequences:
That negative information stays in your file
until June of 2017 (7 years after your
last activity). However, since the account is
more than two years old, it has less of a
negative impact on your credit score than a
newer debt, regardless of the amount.
Scenario 2:
You are tired of the calls and you talk to the
collection agency and come up with a payment
plan, e.g., $100/month. You paid the first $100
in July 2013, but do not pay after that time.
Consequences:
Now you have restarted the time period for how
long the negative information continues on your
credit report (e.g., 7 years). The new date for
this account to fall off from your credit report
is now July of 2020, (7 years after your
last activity which was July of 2013). You
penalize yourself and add an additional three
years and one month to your debt.
Scenario 3:
You would like to take care of your debt, but
don’t have enough money. You want to make
payment arrangements and pay each month until
you pay off or settle your account. You also
want to make sure this action shows some
positive information on your credit report and
when you finish all your agreed payments the
collection agency reports the account as “paid
in full”, “paid as agreed”, or removes that item
from your credit report all together. Consult an
attorney to find out the best way to handle this
situation.
Consequences:
Since the attorney determines the best way to
handle this situation for you, you should be
protected.
HOW to overcome the problems with your credit
history and credit score?
Knowledge, education, awareness, practice and
discipline are the essential keys to being
successful on any subject. The book,
"Credit Score Tips and Tricks",
provides you information, tools, techniques to
educate yourself and manage your credit report &
credit score, and therefore manage your finances
effectively at no additional cost.
I have decided to bring and share with you,
chapters or sections of my book,
Credit Score Tips and Tricks,
as series of
articles here. This is the number
14 of such a
series.
I also created and manage a GROUP in ActiveRain,
Credit Reports and Credit Scores, Please
feel free to join and share your thoughts and
experiences.
