Charge Offs

"Charged off" meand that the company thinks there is such a small chance of getting their money from you that they've written the account off as bad debt.

You are correct that it hurts your credit report. If you pay it and is shows "paid" it will hut it less. In additionl, in at least one state it will come off quicker if you pay it.

You also state that you've been contacted by a Collection Agency. If they are threatening to sue they probably have purchased the debt. That's just a guess, though -- you haven't given us a lot of information.

The fact that they haven't reported to a CRA does not mean that they don't own it. However, I would check with the original creditor before dealing with them -- you don't want to get scammed.

Post more information if you need more help. Good luck.

 

Sqauwk,

what proof do you have that states that a paid collection hurts your score less than an unpaid collection?

Please provide the board with your source of information, for we have been pondering the answer for quite some time!

Thank You in Advance,

We have been under the impression that a collection whether paid or unpaid holds the same status.

That is exactly why we have been advising others to hold out for total deletion or a positive status of a charge-off or collection account.

 

I have no definitive proof. However, at one point I had a 20+ point difference in FICOs between one CRA which accurately showed a charge-off as paid, and one that showed the same charge off informastion but did not show it paid.

After the second was was corrected, the FICO score rose and was within five points of the other score. That was the only change to the credit report other than the passage of time (i.e., account aging).

 

Reshod --

What proof have you been relying on thus far that makes you think that an unpaid collection and a paid collection are equivilant for FICO purposes?

Thanks,

Squawk1200

 

I can vouch that a paid collection doesn't affect score.

i just paid a $48 charge off , and my equifax score didn't do squat.

However i got approved for a citi card, and i was declined a month before for the same product, so the eyes may know the difference, but the computers don't seem to.

 

It's a question of who eats what.

Either you make them eat the debt or you pay it and they make you eat the resulting bad credit report for the next 7 years. They do that as a way of saying "thank you" for paying them off.

Nice thank you note, isn't it. Right smack on your credit report for the next 7 years.

Just tell them you don't think you can stomach that.

 

Yes, they could garnish your wages if they sued you and won a judgement, but I don't know what the likelihood of that happening is...maybe some other board readers do.

You say that it didn't show up on your credit report, but remember you have at least three reports, so it may be on one, but not the other two. How old is the debt? It's possible that you can build a non-adversarial relationship with one of the managers at the collection joint, and maybe get them to unrate the account in exchange for setting up a repayment schedule.

I hope the vB codes worked...

 

BrianG

Don't pay them a crying dime.
They can't garnish your wages until they take you to court and get a summary judgement.
Judgement, then garnishment. Takes a quite a while to get that done.
And if they call you at home and bug you or your wife on the phone, just tell them you do not discuss such matters on the phone and if they have anything to say they need to send you a letter about it. Then just hang up. That will always stop the incessant phone calls. If they call back a second time, ask them just exactly what it was that they failed to understand the last time they called, Then tell them again if you have to. Then hang up. Those nagging phone calls will stop real quick if they find out they can't get anywhere. Then learn what to do when they send you a collection letter. The first step is to send them a good validation letter then follow it up with the next step in putting a cork on the situation in a timely manner.

If you go at it correctly you have have absolutely nothing whatever to worry about.

End up where they eat the debt in it's entirety and take if off your credit reports too.
And never pay them a crying dime in the process because you will be very sorry if you do.

 

Ok - wow - I am about to become really unpopular pretty quick on this board I can tell.

So - you mean to tell me that this person was given $6,000 from someone, then they didn't pay it back so it had to be charged off - and y'all are advising this person to NOT PAY the debts that they owe?! What I would hate to see is that this person would actually take this advice, then get screwed in the end when they are taken to court on a judgement - then not only do they owe the $6,000 - but court cost and attorney's fees on top of that. Lets also not forget that a judgement is on your public record, and will stay on your credit report for a long time - even after its paid.

A judgement also puts a lien on any property that you may own - so if you own property and then sell it - the judgement gets paid first - so the creditor gets their money back anyway.

Once they get a judgement they can (and more than likely will) garnish your wages. So you'll end up paying them back anyway - even after trying to fight it all. If this is a legitimite debt - why not try your hardest to pay it? If a creditor gives you money, you should pay it back (eventually at least).

Trust me - $6k is more than worth the creditors time to fight you for.

Ok - thats my say in the matter. I wish you luck, and I hope you do the right thing (for yourself if for no one else).

Bingo

 

I've got your back, Bingo!

I have to agree...dodging a $6K debt is not as easy as people sometimes make it sound. I'm NOT saying it's impossble (or improbable), but it's not a snap. And if the CA wants to get their money, or if they're feeling vindictive, they do actually have the law on their side for the most part.

Only you know the details of the situation, and only you know how much time you can put into this. As I said before, you may be able to work out a settlement, but then again maybe not.


Good Luck!

 

Ok - wow - I am about to become really unpopular pretty quick on this board I can tell.

BINGO!!!!!
LOL
It's easy to see that you are a newcomer to these parts, so I'll try not to blow your mind right off the bat.
************
So - you mean to tell me that this person was given $6,000 from someone, then they didn't pay it back so it had to be charged off - and y'all are advising this person to NOT PAY the debts that they owe?!

They should have paid it before it went to collections, not after.
Keep your bills current and then that won't happen.
ONce it's in collections, then it's a dog-eat-dog world.
*******************
What I would hate to see is that this person would actually take this advice, then get screwed in the end (which end?)when they are taken to court on a judgement - then not only do they owe the $6,000 - but court cost and attorney's fees on top of that. How about let's put a few hitches in that git-along???

I see you have been listening to and believe all the hype put out by the collection agencies. That only happens when one lets it happen. Then they are asking for it, no, begging for it. One has to act in a positive manner long before it ever gets to court or even anywhere near
************
Lets also not forget that a judgement is on your public record, and will stay on your credit report for a long time - even after its paid.

Just don't ever bet your bottom dollar on that statement! You might lose it real quick around these parts.
************
A judgement also puts a lien on any property that you may own - so if you own property and then sell it - the judgement gets paid first - so the creditor gets their money back anyway.

Not necessarily. Lots of instances where judgements do not or even cannot be placed against a property because one owes a debt and gets a judgement because of it.
*************
Once they get a judgement they can (and more than likely will) garnish your wages.

Curiously enough, nationwide, only about 30% of all judgements are ever collected. Of the rest, 705, the holder of the judgement never sees a crying dime for their effort.
That is by national statistics. Not a real great return on money and time spent.
*************
So you'll end up paying them back anyway - even after trying to fight it all.

When I fight them, I win they lose.. End of fight.
***************
If this is a legitimite debt - why not try your hardest to pay it? Why? So you can enjoy 7 years of bad credit marks on your credit files? Anyway, what good is having a legitimate debt against someone if you use it to go break the law trying to collect it and end up in huge legal fees for doing it? Most debt collectors routinely violate the law and their victims civil rights as well.
**************
If a creditor gives you money, you should pay it back (eventually at least).

I agree with you wholeheartedly. Paying it back is the right thing to do. But so many who have good intentions and truly wish to pay what they owe fall onto hard times one way or another. That's when the problems start. But do you think it's right for a bill collector to drive a couple almost to the point of insantiy and almost certain divorce and break up of the family? Yet that is exactly what happens in so many cases. People have even been known to commit suicide because of bill collectors.
*************
Trust me - $6k is more than worth the creditors time to fight you for.

Maybe so, maybe not. I've seen them decide it wasn't worth 10 times that much and more. Just depends on how hard you twist their arm. Twist it hard enough and no amount is worth the fight.
*************
Ok - thats my say in the matter. I wish you luck, and I hope you do the right thing (for yourself if for no one else).

Bingo!!!!!!!

Yes, I'll go along with that statement even if our ideas are poles apart.
*************
Stick around a while. Your education is just beginning.
Have fun
Everybody else does.

 

I'm with you Bingo. I do in-house legal collections for a finance company. If I call someone at work and they are employed there its payment or a lawsuit, no question. Once I have employment it is almost a guarantee for garnishment and you can rest assure I won't call anymore. Collections is a whole lot easier when I'm getting paid by your employers bookkeeper with a court order. Payments are prompt, consistant and rarely require follow up and these bookkeepers are usually 100x more pleasant to deal with than the debtor. Furthermore, it may dishearten some here, but I am required to file 40 garnishments a month in order to avoid being put on report for non-performance and is the minimum required for bonus. I wouldn't imagine this being unusual in ca's also.

Charge-offs don't happen overnight, usually six months of no payment or insufficient payments. Thats enough time for most people to realize they have a problem and to get off the pot. However, alot of people will continue to do what they have been doing all along and expecting a different result. It doesn't happen. Make payment arrangements, file bk, get credit counseling, borrow against your 401k, get a part time job, borrow from your auntie or your church. But if you procrastinate or blow it off don't cry victim when the sheriff is at your door.

I don't say this to understate the mission of this board. Yes we make mistakes and we learn from them and we have to go through this sludge to put everything back together again. Sometimes that may mean paying back the $ that we agreed to pay back in the first place.

Mahalo,
PuuOoPaul

 

Just a few comments on the "Judgement" portion of this conversation.

With a 6K debt it is certainly possible for a creditor to file a suit and seek a judgement. It depends on the state, however, just how much validity this holds in regard to liens and garnishments. In Texas for example, it is nearly impossible for wages to be garnished - I realized this when doing child support collections for 4 years. Even in the case of child support a garnishment was nearly impossible. Believe me, a Child Support debt holds much more validity and is a much higher priority than a judgement for a commercial debt. In other states the amount of the garnishment can be limited to a very small amount. I know of one person with credit card debt, that was sued, went to the hearing, the creditor received a judgement for an $11,000 debt and was allowed to garnish 10% of his take home pay. He simply had his hours cut back at work to part time, giving the creditor a resulting $50.00 per month, and began a new job the creditor was never aware of. Others I have known, depending on their career choice will skip from job to job, quitting each time the garnishment is served. So a garnishment is not all it is cracked up to be in legal power.

In regard to liens, unless the person chooses to sell or refinance the home they are virtually worthless. Although the average person remains in a home less than 10 years, it is possible to remain in the home for as long as you wish. The creditor cannot force you to sell or refinance.

With a large collection agency, they may very well have attorneys on staff or on retainer. However, with the smaller ones this is not always the case and the cost of billable hours may not be worth the effort of suing. I was sued several years ago by a collection agency out of state, and simply filed in my response that the agency: #1. Was not incorporated, registered or licensed to do business in my state; #2. Could not assert jurisdiction over me in my home state; #3. Requested a change of venue if the collection agency wanted to proceed asking that they appear in local court - The court dismissed the suit based on item #2 - stating the suite was dismissed without prejudice if the collector wanted to refile in my state. I proposed a counter offer for 30% of the debt in exchange for total deletion on my credit profile which was agreed to.

 

Atta Boy, Paul.

Keep 'em running scared. Makes the ol job a lot easier if you can do that.

The following is an extremely short list of collectors such as your self that thought exactly as you do. Probably thought they were supermen, could stomp all over the poor sheep if they stepped out of line. I can't put them all down by any stretch of the imagination because the list would be well over 1000 lines long. But just a few.Most have lost multiple times, never seeming to figure out how to do it right.

Internal Revenue Service tax liens, garnishments, seizures,
Student Loans -- my own only so far.
State property tax liens -- 4 states so far.(Can't figure out what moeny is so far!!)
Ford Motor Credit
GMAC
Chrysler Credit
The Money Store
Orchard Bank
Humboldt Bank
Household Finance
Providian
Capitol One
First Enterprise Bank
McClain County Oklahoma Board of County Commissioners
Silver Collection agency
Coldata
NCO Financial
EMMC.INC
Plaza Associates
X.COM
ATTENTION LLC.
Sears
JC Penny
Target
Wal-Mart
Works & Lentz Inc Attys - collections
Amex
Discover
Credit Services International
Oklahoma Natural Gas
Oklahoma Gas & Electric
Consumers Public Power Co.
S.W. Bell Telephone
Oklahoma City Water Resources
Chase Bank
Sprint
MCI
Dillards
FW Woolworth
Foleys
Macys
Gold's
Firestone
Goodyear

That's just a very few. I have 4 filing cabinets packed full of losers just like the ones above. Had to order in 2 more new ones Friday because we just couldn't pack any more in the 4 we already had.

I just had to hire 2 more new gals to handle the load and the way local people are coming into the office, I'm gong to have to find bigger digs before long.

And all those 4 filing cabinets are full of the histories of bill collectors who thought they had people in between a rock and the hard place. Thought they had people scared out of their ever lovin minds.

Keep up the good work, Paul. Keep them running scared until they find out different. Find out they don't have to put up with that stuff. Then the worm turns.

And you don't even have to believe me, which I am quite sure you won't. All people have to do is take the time to read through the postings on this board and others throughout the internet to find out how many others I never had anything to do with have gone up against sure-fire bill collectors and won. I'm not any original genius or Uri Geller bending steel plates with the will of my mind. Once they take the time to do a little reading, they will know that what I am saying is the truth, not just the ramblings of some lunatic.

 

Yes, Paul

And those are just a very few of the possibilities.

As all of us here know, collectors and collection agencies make serious blunders all the time. It's almost the norm because of the fact that they often use comparatively low paid, low skills people to do most of the work. So they make a lot of mistakes.

That works for them most of the time because very few of the debtors are aware of their rights and the laws, so the collectors get away with gross errors and violations of FDCPA, UUC, Fair Trade and other laws are almost routine.
Even their attorneys make big mistakes in dealing with the public simply because they are so used to the fact that the public is scared to death of them.

That will never change because the vast majority of people are quite well brain washed to believe that they have no alternatives.

 

The following is from experience, not what I think might happen. Whether or not the creditor will sue depends on, among other things, your salary, your employment history, local laws, etc. In easy terms, if he thinks he can collect easier through a suit , he will sue. If not, he won't.

Look at your situation. Are you employed? Does your state allow garnishmnent of wages? Do you make enough money to make it worthwile for the creditor?

When I dealt with a CA in December, the agent knew more than I did about my personal finances. He knew, to the penny, how much was in each of my bank accounts and how much credit I had left on each of my credit cards. It scared the hell out of me.
I think they would have sued me because I had the assets.

When I helped my father in law out of some problems, he had over 20 credit cards and no income other than a small Social security payment. His credit card payments were a minimum of $2000 per month, income was $600. Most of the creditors settled for pennies on the dollar. The point is that he had nothing they could get so they were willing to go away without a suit.

The other problem you may have, depending on your age, is that they might sue and get a judgement hoping you will have income in the future.

 

I don't think you want to be dealing with these people at all. In your position, I'd send the ole, "I've decided I'll only deal with the original creditor...goodbye" letter to this collection agency.

Don't forget to make it certified, return receipt requested. Then go back to dealing with your original creditor.

Take no more phone calls from that agency, EVER. And NO, they can't garnish your wages without filing suit and winning a court order. All of which you'd be aware of weeks/months in advance. (Unless they don't perform the service properly, in which case you'd have grounds to have the judgment vacated).

 

Not to put words into anyone's mouth, but I think we're all basically trying to give the same advice.

NOT that he should not pay back the debt. But that he needs to stop dealing with THIS abusive CA now and go deal directly with his original creditor.