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Question By
Jeffro2011

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I'm confused if I should pay an old debt or not. Help please!
I had a credit card from capital one for $300. The wife and I went through a rough patch (she woke up 100% def one morning and no longer could work) she lost her income that we depended on and needed the money on the card to buy food basically and had no way to pay the debt back at that time. They did work with me slightly but the late fees kept racking up and they terminated the card when the total was to $460. Well fast forward a year later and my wife is getting a small amount of disability and I'm at a much better paying job. Things are looking bright. Except my credit that is. Currently it's at 630. It seems to fluctuate between 630 and 650. So now there is a second party collection agency calling me and they want me to pay $240 for the calls to stop and the debt to go away. They say if I pay the full $460 it will look better on my credit. I told them I'll try to get money together by December and possibly get it taken care of.

Do I pay the minimum? Do I pay it in full? Will this help my credit or hurt it? How reputable are these places. Thanks in advance!

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Take care of it!

Helpful to 1 out of 1 people

Pay the debt, Work out a payment plan, Ask for cash at christmas, Whatever it takes to get this taken care of.  It will not go away for 7 years unless its paid off, and the longer its on your report the worse your score will get and the longer it will take to recover. 

Its realitively small amount.  If they will take $240 to settle this, DO IT.

Good luck

Reply by
Jeffro2011

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I definitely plan on paying it. Just wanted to ask the experts first. I appreciate your help. Will a full payment look better than the smaller payment that they said they will settle for?

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Reply by
JohnnyRain127

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First, paid or unpaid collections can only last on your report for 7 1/2 years, so yes it will go away from your report eventually even if it wasn't paid. And the older the debt is? The lesser of impact to your scores it will be.

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Full payment might look better for any potential creditors, and fully paid would prevent to collection agency taking any further action against you. At times when you settle for less? The CA would sell the remaining balance to another CA. However, it doesn't make much difference to your credit scores tho, as majority of scoring models doesn't distinguish between paid and unpaid collections, some lenders would denial you outright for have collection on your report regardless if it's paid or not. 

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Pay Original Creditor Directly

Not really. What you want is for them to have the account appear on your report "settled paid in full". They are asking for more money because since they are a collection agency, they will get paid more if they get more out of you. I had a Cap 1 that I fell behind on with a bad job situation too. The account went terminated and a collection agency called me, instead of paying them I went right back and contacted Cap 1 directly (since I now had the money to pay it), and made the payment directly to Cap 1. Cap 1 reported the account paid. I got proof it was paid and submitted it to the credit bureaus they completely removed the collection account from my reports. If you can pay Cap 1 directly---do that. If you can't, make sure that you get it in writing from the collection agency that they will report the account paid in full if they said they will take the $240 to do so. Pay them by check or a money order, do NOT give them your checking account info over the phone or a credit card over the phone to pay. If you pay by money order, make a copy of it for your records for proof of payment. If you pay by check make sure you get a copy of it (back and front) showing it cleared your account as proof it was paid. If the collection agency reported the Cap 1 as a collection account to your reports, dispute asap and provide the copy of the proof of payment. If you go to each website for each credit bureau it appears on, you can dispute for free and they will allow you to upload proof of payment. It is pretty easy to do.

The bureaus will email you with the status of the dispute which you will be able to see online.

https://www.transunion.com/credit-disputes/dispute-your-credit

http://www.experian.com/disputes/main.html

https://experian.referral.equifax.com/CreditInvestigation/home.action

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