Working to Get Rid of Collection Charge Offs
Collection charge offs are one of the easiest ways to start digging your way out of debt. However, with so many different options available, how do you know which is best for you? Most people find that they can benefit most by working with a reputable collection agency that has built a good reputation over the years. In this article, we’ll take a look at some of the factors to consider when shopping around for a company to help you eliminate debt.
First of all, make sure that you understand what collection charges actually are. Generally, when creditors send collection agencies after you for a past due payment, they are collecting on the outstanding balance. They will then add these extra charges to your original debt balance and sell them to a collection agency. This charge is included on your credit report, so it can stay there for up to seven years. During this seven year period, any future attempts to contact you by the collection agency will still be considered harassment. Additionally, any legal action taken against you will be reported to the credit reporting bureaus.
So how can you get out from under this pressure? One option is to pay the full amount owed to the creditor, including any interest and late fees. While this will clear up your entire account and may even lower your score temporarily, it will most likely not improve your credit rating. A better option would be to negotiate a ‘pay for delete’ agreement. Under this agreement, once you pay off the full account, the collection agency cannot contact you about the matter. You are still responsible for any outstanding debt during this seven year period.
Before signing any type of agreement with a collection agency, be sure that you understand every word and phrase. For example, when agreeing to a ‘pay for delete agreement’, remember that the agreement does not prevent you from taking out additional loans or credit. It only prevents the collection agency from pursuing you for the money. If you take out more credit, it won’t show on your report and the agency can sue you for the debt.
Collection charge offs are an unpleasant fact of life for many Americans. However, there are ways to fight them. First, be sure that you understand all of your rights during the collections process. Next, be sure to dispute the charge off as soon as possible. Finally, work with the collection agency to agree repayment terms before you pay the charge off.
Because collection agency fees can be quite high, the sooner you begin to pay off the charge off, the more money you will save. Of course, once the account is closed, you are not responsible for paying the charge off. But by working with the collection agency, you can at least have some leverage and possibly get the account closed. The longer you wait to repay the charge off, the more difficult it becomes to undo the damage to your credit report. If you know you are going to have a charge off on your credit report within the next sixty days, take action immediately to eliminate the negative impact on your credit score.
The best way to get started is to dispute the charge off. This will make the collection agency address what they removed from your report, allowing you to have part of the problem taken care of. It also shows that you are taking responsibility for your accounts and are going to do whatever it takes to make them go away. Some options include disputing items individually with each collection agency, or sending a letter to the collection agency informing them you are disputing their charge. If you choose to send a letter, be sure to attach any documents that prove the validity of your claim. Your credit report may be temporarily affected while the collection agency works out the dispute, but eventually the items will be removed.
It’s important to realize that while a charge off on your credit report is troublesome, it is not the end of your credit life. Even if you don’t see any other negative items, you should still try to improve your credit rating. There are many ways to go about doing this, including repairing any collections you’ve paid off, and making sure you don’t open new accounts. While it can be frustrating working your way through a difficult collection agency, staying on top of your credit will ultimately work in your favor. Eventually, you will be able to get that old charge off and enjoy a better credit rating.