Fixing my credit – how to deal with this collection?
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I’m working on fixing my credit , so I tried to settle a charge off that’s on my credit report from 3 years ago. It ‘s on a personal loan from NBT bank that was originally $5,000.
I called NBT to see whether I can settle with them the account, and was told that my debt was sold to a collection company.
The collection company wants me to pay them $1,000 up front, the rest with $100 monthly payments. They said the will update NBT on the payment, but will not issue a written form or letter until I make the $1,000 first.
When I called NBT to confirm that they will update my status with the credit bureaus, I was told the information is not true, and that they no longer have anything with this account.
What should I do? Pay the debt or wait 7 years for the debt to be age off my report ?
Re: Fixing my credit
DO NOT PAY THEM ANYTHING W/O A WRITEN CONTRACT!
The collection agency is lying to you. Once NBT bank has sold them the debt they own it solely and do no report anything to the bank. The bank has charge off the account, meaning that they are done with it completely.
The collection agency is the entity that reports now to the credit bureaus. They NEVER update the account if you make monthly payments to them. Only if you make a full payment or make a settlement.
So, DO NOT pay them anything a written settlement agreement in hand. In general, payments plans are a very bad idea. A one-time lump sum settlement is much better. Since the default is three years old, you’ll probably be able to settle for 25%-30% of the original debt.
Agree to settle only if they update the account with the credit bureaus. Have them send you the contract and pay only when you get it.
In any case, never give them direct access to your bank account. Pay with a money order or cashier’s check.
Once paid, the account should be updated to “Paid in Full”, “Paid” or “Settled” with a $0 balance. It will still damage your credit report, but potential creditors will see it in a much favorable than an unsettled collection.
Don’t just wait for the debt to age off your report. It is likely that this debt is still within the Statute of Limitations (SOL), the time frame to bring lawsuit. They Will sue, and can probably garnish wages and go after your assets.
You may should really prefer a settlement to avoid potential lawsuit. A judgment would further damage your credit.
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