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Pexia

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Should I pay my collections debt?
I am currently trying to rebuild my credit which is currently about 550. I struggled for a long time as a single parent and could barely make ends meet most months. Thankfully I am finally in a better place financially where I can start clearing some stuff up. I've finally looked at my credit report and see there are a couple collections accounts. Both are from credit cards I wasn't able to pay at the time. My first instinct was to pay them off as soon as I can but I've read that it may actually hurt my score and since is a few years old already I should just let it go. Is this true? I need to improve my score and just got a secured card to help me revuild and have worked out a payment plan for my student loans. Is that enough to help me increase my score? Or should I pay off those collection accounts as well? If i am to pay them how should I go about it? Pay the agency or the original creditor?

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You are definitely on the right track and congratulations on taking control of your credit and working to get a better future for yourself. Just don't be hasty with this, your caution on how to proceed is wise. Take time and read all that you can on the subject before taking action. I will run some things by you here and you can read up on them:

Most negative accounts fall off your reports in seven years. Are the accounts going to fall off any time soon? If the accounts are over the five year mark, it may be best to let them age off. The starting time of the seven years is known as the DOFD (date of first delinquency). This date it typically one month after you made the last payment on the Original Account. The date the collection account was opened has nothing to do with the seven year rule. Collections are usually opened much later than the DOFD.

Check the "statute of limitations" to be sued for this type of debt in YOUR state. See if they can legally sue you or not. The seven year reporting time period and the "statute of limitations" are two separate things. The SOL in most state is usually much shorter than the reporting time period. When dealing with debt collectors you must be wary and avoid setting up payment arrangements as this can restart the "statute of limitations" But would not restart the reporting period as nothing can reset that.

Do some reading on "disputing incorrect information", "debt validation letters", "pay for delete agreements" and everything that you can find on this subject. Come back and ask questions if need be. Search the internet for information as there are many helpful sites out there.

Typically, original creditors will not accept payments if the account was sold to debt collectors, so you will need to deal with the debt collectors if you decide to pay, but don't do anything until you have a thorough knowledge of all this as debt collectors are tricky and they are not your friend. Do some reading on the FDCPA too. (fair debt collection practices act).

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