Best way to deal with a collection on your credit history?

I checked my credit report yesterday, and there was one BIG surprise on it. Back in 2007 (when I was younger and more irresponsible), I made a trip to the hospital for some breathing difficulties and was discharged with a $300 bill. My memory of this event was lost to the sands of time (I was likely a lot more preoccupied with college parties at that time) until I saw my report yesterday. The $300 is insignificant, I would have paid this YEARS ago had I known - I'm actually amazed the collection agency hasn't found me yet.

I'm just wondering how to best proceed for my credit's sake - should I pursue paying the hospital directly, or should I just pay the collection agency? This is the only bad mark on my entire credit report so I'd like to deal with it as effectively as possible. I'm sure my credit is already boned either way though - I have no idea why I didn't just pay it, but you know what they say about hindsight...

Contact the credit report company and dispute it first. Even if you retroactivly pay it to clear your conscience, they will need to dig up proof to keep it on your record. There is a good chance they will not be able to, or won't be bothered to try and will just wipe your report clean. I had the same thing happen with a store credit card charge that I disputed and refused to pay. I had no idea it had gone on my credit history until I went to renew my mortgage. But I complained and demanded proof which they could not supply so they just took it off.

Dispute dispute dispute. It'll still show up on your report if you pay it, so I wouldn't be in too much of a hurry to do that. As for the post above mine, if something sounds too good to be true, it probably is.

Dispute.

It's up to the lender to prove that you owe them money, you aren't required to show proof fo payment to the credit reporting agencies.

Shawn

Lexington Law are a good and reputable company, they did help me out when I needed it, but it takes some time to get it sorted.

Well, the first step if you want to do something about it is to verify that this is a legitimate debt - it sounds like it might be, but it wouldn't be the first time that it wasn't.

The second part is - check if the debt is covered by the statute of limitations. I'd do that before any dispute or other contact with the collector. Especially if it is covered (which basically means that the debt collector couldn't force you to pay it via the courts) it might be a good idea to let sleeping dogs lie in this case. IIRC that statute of limitiations gets reset (at least in some cases) by contact with the collector so make sure you know where you stand first. Yes, I know the moral thing is to pay it and I'm not advocating that you don't, but you don't want to open a can of worms either here.

Once you check it is legit you can always ask the collection agency to provide you with proof of the debt - IIRC by law they will have to. If they can't provide proof you can dispute the debt and tell them to take a hike. If they provide proof and the statute hasn't expired, negotiate with them - they bought it for pennies on the dollar so some hard nosed negotiation is in order.

http://creditboards.com is the forum you want for this type of stuff.

Your best bet is to pay it if you can. They gave you the services, you do owe them the money.

If you pay the hospital, get written documentation that you've paid the debt, plus interest and that it is fully discharged. If any collections agency comes after you once you do that, here is the type of letter you should write:

http://consumerist.com/2007/07/sample-letter-for-disputing-a-debt-collection-notice.html

Read the statue that it references, too.

Sorry guys, there is some bad advice in this thread.

First, you do not owe the hospital money any more, they have sold the debt to the collection company. You will be dealing with the collection agency. Pay them by check so you have documentation of the payment, but before doing so, clarify that your payment will result in them sending you a letter stating that it is paid in full and that they are going to update the credit bureaus. Once that is done, wait 30-60 days, and verify that it shows as paid and zero balance. At that point your credit scores will begin the long process of improving.

Working with a credit repair agency would be wasted money. Send me a message offline if you want to discuss, I'm a mortgage banker and advising on this stuff is part of what I do to help my clients.

BoxheadTim wrote: The second part is - check if the debt is covered by the statute of limitations

This is good advice. I believe most debts expire off your credit report after 7 years from the delinquency. If it's been close to that long and you don't need to borrow money before the end of that time period it might be worth waiting it out. Obviously you should confirm that this specific debt is going to expire before counting on that.

You are allowed to submit written explanations to the credit bureaus for anything on your report and they have to add it. I had fun finding a job after college and my student loans went into default.

When i was able to start paying again, I made as large a payment as I could afford each month. I also submitted written explanations to equifax and trans union saying I got into a bad spot, but was currently employed and making regular payments. After that, I was able to start rebuilding my credit with a low limit card.

Also, if you apply for credit and are turned down, you can apply to the credit bureaus and they have to provide you with your history free of charge for 60 days after you're turned down. At least that was the case when I had my issues.

Option 1 - Do nothing. It will fall off in 2 years.

Option 2 - Contact the hospital, tell them you were unaware of any money owed, and ask for a payoff amount. The upside of paying it off is that you paid it off. The downside is that the thing stays on your credit report for 7 years from the last activity, so you rest that clock as soon as you pay the bill.

First of all, this is literally the only negative mark on my credit, so I'd rather avoid a credit repair firm unless I absolutely have to. Dave, as you (and others) pointed out, this was five years ago, two more to reach the statute of limitations is almost water under the bridge at this point. That being said, my income has risen significantly and I may be interested in financing a vehicle or house in the near future, so it would be worth the settlement cost to make it disappear now if possible.

One option I have become interested in is a "pay for delete." I've drafted a letter based on this template offering to pay the full amount in exchange for them removing the entry from my credit report. I haven't put it in the mail yet. Is this a bad idea?

Mainly, I understand the ball is in my court - it's not like waiting another two years for the SOL will kill me, and maybe the collection agency will see that. I'd be happy to pay it now, though, if there was something in it for me. Considering they bought the debt in the first place, wouldn't they be interested in full payment while they can still get it?

PeterAK - YGM.

SlickDizzy wrote: First of all, this is literally the only negative mark on my credit, so I'd rather avoid a credit repair firm unless I absolutely have to. Dave, as you (and others) pointed out, this was five years ago, two more to reach the statute of limitations is almost water under the bridge at this point. That being said, my income has risen significantly and I may be interested in financing a vehicle or house in the near future, so it would be worth the settlement cost to make it disappear now if possible. One option I have become interested in is a "pay for delete." I've drafted a letter based on this template offering to pay the full amount in exchange for them removing the entry from my credit report. I haven't put it in the mail yet. Is this a bad idea? PeterAK - YGM.

Good luck getting them to remove it.

SlickDizzy wrote: One option I have become interested in is a "pay for delete." I've drafted a letter based on this template offering to pay the full amount in exchange for them removing the entry from my credit report. I haven't put it in the mail yet. Is this a bad idea?

It's a gamble. The second you send that later, the 7 year clock is reset. If they don't delete, then you're berkeleyed for another 7 years without much you can do about it.

One of my brothers owned a credit repair company for about 10 years.

At this point, you have nothing to gain and much to lose by paying it. Why?

Paying it is like saying 'OK I welshed on it and now that it's caught up with me and become an inconvenience I want it gone'. They won't remove it from your CR because it doesn't gain them a thing.

The original creditor sold the debt to the collection agency and they are no longer entitled to anything. THEY are the ones who put this on your CR in the first place and only THEY can take it off. The collection agency CANNOT put anything on your CR and they CANNOT take it off, so paying them is useless.

Dispute, dispute, dispute, tell them to put up some proof or shut up, i.e take it off your report (that will not restart the clock). Or just wait 2 years and let it fall off.

Do nothing, I was in collections for awhile and no one is going to take it off your credit report. If you ask for validation of debt and they provide it it will be reset.

Who ever is telling you to go to a credit repair place has no idea what they really do. They simply dispute everything on your credit report and wait 90 days for validation of debt. Any they don't come through get removed. but then they offer settlements on everything that did come though. Then they save up whatever you pay them every month and try to settle all of your debt this could take them years, but in the process screw up your credit.it It does not sound like you need it anyway.

Don't ever go to one of those places.

screw the collection agency, never pay those guys.

i had a disputed med bill go to collection. i was completely mis-diagnosed by doctor even though 2 nurses and myself knew what was up. was sent home with "a cold" and missed week of work with pneumonia. told the ER what happened and that i would not be paying for their services until i was paid for time off work. surprise, it got sent to collection. i went in and paid them in person with a check, got a receipt. collection agency kept reporting it that it was uncollected on my credit report. when i contacted them to tell them i had paid them in person they started sending more bills asking for the $ again. i ignored them.

i had another ER visit in february. totally happy, stitched me up. got one bill and paid. got another letter that said "this is not a bill, do not pay, has been submitted to your insurance" - 2 weeks later collection calls started. i called hospital, asked wtf was up, they admitted mistake and took payment over the phone. i'm sure the collection agency will still ding my credit report even though it's not my fault and i was ready to pay.

don't ask don't tell, it'll be gone in 2 years.

bearmtnmartin wrote: Contact the credit report company and dispute it first. Even if you retroactivly pay it to clear your conscience, they will need to dig up proof to keep it on your record. There is a good chance they will not be able to, or won't be bothered to try and will just wipe your report clean. I had the same thing happen with a store credit card charge that I disputed and refused to pay. I had no idea it had gone on my credit history until I went to renew my mortgage. But I complained and demanded proof which they could not supply so they just took it off.

WRONG!!!

You only dispute things at the credit bureau level if you are sure they aren't actively being reported. If it's not been update within the last year you can dispute it. If it's still being currently reported then you have to go to the horse's mouth (not a good idea with a collection agency) to get the info changed.

If you dispute something that is indisputable then they can lock you out of your own credit account for 6 months which simply means you can't add or change any data unit the lock out period is over. This power was given to them by Congress because they said they were being inundated with bogus disputes. So many they couldn't do their real job of making sure all the information on the bureau was correct - yea right!

When I finished reading this thread I was totally flabergasted at the amount of misunderstanding of the credit system displayed here. PM me and I'll step you through the processs, it's not hard. The proper way to deal with this account depends upon who owns the debt now and how it's being reported. So that's the first step to get a report and see how it's being reported.

The free credit reports are worth exactly what you paid for them. They are usually incomplete, inaccurate and don't give you the info you need to be able to work on the data.

Paying off a collection makes it a brand new collection that happened the day you paid it off and reinstates the 7 year reporting period so there's rarely any benefit to paying any money to a collection agency.

I have never seen such polar opposites of advice in a thread before.

I'll avoid adding to the confusion.

I have often found that getting your local representitive involved helps wonders. While I never had the issue with my credit history, I have used mine to get Disability off of their asses