Since I went to college in 2005, i've acquired over $25k in student loans, along with medical bills totaling $4,800.00, and a credit card charged off at a final balance of $565.00. My student loans were taken care with a Federal Direct Loan from the Dept. of Education and I am currently in deferment with them for the next 4 months. I've recently acquired $5,600.00 and I want to pay off my credit card that is charged off, and all of my medical bills that are charged off. To my understanding, paying off all of my debts, minus the student loans, will eventually remove them from my credit report, displaying no trace of them. Also to my understanding, once these are removed, I will have no credit history besides my student loans. I'm fine with the student loans remains since they are currently in good standing. The medical bills do nothing for my credit once they are paid. I do however want to negotiate with my credit card company on reopening the charge off and reestablishing my credit back with them into good standing by paying off the entire card and reopening my line of credit. (If they will let me). (I would also pay off all my bad medical bills first and get them removed before I try to negotiate with the CC company to show that i'm a better candidate for credit worthiness, as long as my Student loan remains in good standing.) (I'm also aware that it takes several months after a debt has been repaid to be removed from my credit report.) Since, from my understanding, credit worthiness is deemed by a long history of good credit, I want to try and re-establish a good account with my old credit card company since i've had it for 4 years. I also understand that I can negotiate a settlement with my medical bills and the collection agency's charged in dealing with my charged off accounts. So what am I asking? Is this a good strategy? Removing the bad and trying to maintain or better bad credit to good credit ratio? The game plan in doing all of this, this way, is to remove the bad, and show only good long standing accounts. Comments, suggestions?
i'm also curious as to how disputing things on my credit report would speed things up.... or what the point of disputing a charge off first would be.
First, you need to understand that paying off an old debt will NOT remove it from your credit report. So, unless you negotiate the complete removal of the medical collection and CC collection in return for payment with your creditors, they will remain on your credit reports as "paid" negatives. They will continue to hurt your credit scores just as much as an "unpaid" debt. Keep that in mind as you begin to negotiate with them. Who actually has your debts now? It sounds like CAs are collecting both the CC debt and the medical debt? What communication have you received from them thus far? Remember, if these debts have been charged off and sold, you'll need to work directly with the CAs, not the OCs.
I would say that after this much time has passed, you should not pay a penny toward these old charged-off debts. Doing so would essentially be flushing money down the toilet. First, in almost every state, the statute of limitations is 3 to 5 years on consumer debt such as credit cards, and on debt such as unpaid medical bills. This means that unless the creditor (or their collection agency) has already filed a lawsuit and obtained a judgement, the time for them to do so has passed. Second, paying defaulted debts that are already in charge-off status does not remove the account from your credit report, nor does it significantly improve your credit score or creditworthiness to prospective lenders. Third, paying anything toward these old debts will update the date of last activity, which could actually make your credit scores go down compared to what they'd be if you simply did nothing. Fourth, under Federal law, negative information (such as these charged-off accounts) can only appear in your credit report for 7 years from the date of first delinquency. So debts which charged-off in 2005 will be removed from your credit report in 2012 (which is only next year) regardless of whether you pay them or not. Fifth, unlike the credit cards and other unsecured debts you have, your student loans can never be discharged in bankruptcy--even if you are unemployed for a long time--and can increase by a factor of 3 or more as interest is added and capitalized over time. If you have come upon $5600 that you don't need for other purposes (such as to have a safety cushion to pay your rent and other bills if you get laid off) then I suggest you put it toward your student loans. You will save yourself a lot of money in the long-term, and your credit report will improve on its own in a year or so.
Let me start by introducing myself to everyone. I recently got into the debt collection business per a new job as a legal coordinator at the HQ for a finance company covering 15 branches. No formal training, all OJT. As a young 20 something that left college 4 years ago, I didn't worry at all about my credit. As i'm getting ready to start looking to getting a house within the next couple of years and realizing how real my debt affects all of this, I want to fix it. I've never disputed any of my bad credit, my phone is set up to hang up on blacklisted creditors calling, and most collection letters have made it to the trash. Fortunately, the same thing I do to other debtors day in and day out hasn't yet gone as far. I've been sued twice on two debts that I settled before a judgement. I honestly can't explain how embarrassed I would be as far as the business that I am in, if my coworkers were to see a garnishment summons with my name on it. I appreciate all the feed back so far as i've only been researching this for the past three weeks. @JoshuaHeckathorn All of my charged off debt is at CA's. But I think it's a great idea that you mentioned negotiating taking them off in exchange for repayment. I guess it would be a bad idea to negotiate not only the removal of them but also for a settlement. @BCOHEN2010 I'm curious to know when the start date for the SOL actually started. My credit reports only gives me a date that it was sent to collections and an estimated date of removal. I know where I live, for the state of Oklahoma, Collections only have 5 years to receive judgement, and as long as they can renew the judgement before the end of the SOL, it starts again. As I have only been served twice and settled before court, which both of those items were taken off of my credit report after three years from the date of the pay off, I have never really had to deal with any of that. So before another lawsuit, I want to fix this. What are your opinions on how to proceed. I obviously want to raise my credit score. What do I do?
You could either wait it out or try to get the negative marks removed in return for payment. It's up to you. Since the debts are beyond the SOL and about to fall off your credit reports, you may want to just wait and see what happens. Are the CAs on your back all the time, or are things relatively quiet?
I average two letters total from all CA's a month. I get about 3 phone calls a day, but my phone is set to answer all 1-8xx numbers and hangup immediately. Thank you android phone. Here is a question, what can I do to increase positive accounts on my credit report?
Do you know anyone (relative/spouse) with great credit that would be willing to add you as an AU on one of their oldest credit cards in good standing? That's the fastest way to get some positive accounts on your credit reports. If your credit is too bad to get approved for an unsecured card, you could also go the secured credit card route and start building positive payment history that way. After 6 months or so, you should then be able to upgrade to an unsecured card with better terms and rewards. Just make sure you're prepared to not get yourself into the same problems again. Only buy what you have the cash to pay for already, and always pay your credit card bills in full and on time. If you do those 2 things, you'll never have another problem with credit cards.
