When a creditor charges off an account and a collection agency takes over why pay the collection agency and will paying the collection agency help your credit?

Answer 1

If you live in a debtor state (like TX) all the creditors can really do is harass you and wreck your credit rating. Otherwise they may be able to garnish your wages. As for paying off a company who has a charged-off account of yours, if you pay it, it will still reflect favorably on your credit report as long as you make sure they report it as 'paid' and not 'settled'. So there are advantages to paying a charge-off, even if the account has changed hands two or three times. And remember: when anyone defaults on a credit card bill, it affects everyone's rates! == Charging (or writing) off a debt - see the many discussion on that topic - does not discharge, eliminate or end the debt. It is simply an accounting requirement the creditor must make to so his books reflect what was either income, or an asset (an account receivable), is unlikely to be realized. Again the debt is still valid and collectible. After reporting the charge off, the debt may still be reported as not paid and currently due. Hence, the negative report of a charge off has company by many more negatives, some more recent. After the charge off, the debt may still be sold to someone else. After being charged off, the collection efforts, including leins and judgments may continue. A judgment may be against you for 20 years....and in most cases, can be easily renewed. Anything you own in the future with an outstanding judgment is subject to seizure...and essentially the same is true for liens. See discussions about judgments. If you try to get a loan to buy something, say a house or car, with outstanding debts owed, especially if liens or judgment status, it is very difficult for several primary reason: You didn't pay the prior credit extended to you and it must be considered as a debt due and reduce the income you have available to pay the "new" credit your asking for. The asset being purchased is subject to being seized and hence the new lender has a risk of losing the security, or at least, of the old one taking action, like garnishment, so it gets paid before the new one. The last part is easy: If you were looking at giving someone a loan, basically because they ask for it and promise to repay - which do you think looks better: Someone had trouble in their past, even missed payments and didn't/couldn't do as they promised...but eventually did....or they never cared enough to and didn't? One Collection Agency sent me a disposition that it had been paid in full. The other Collection Agency did not contact me. I know that it was paid by the statement I receive from the Debt Consolidator. I contacted the Collection Agency that had the paid in full debt, and they said they do not report this to the Credit Reporting Agencies. I called Experian and had them check these two out for me. Even though they were paid, it will not reflect on my Credit Report, and these two negative entries will stay on my Credit Report until the year 2014. Guess what, I'll be dead by then. While something doesn't exactly jive...that systems fail or aren't follwed isn't too strange. However you have one very real and easy option: You are always allowed to write a personal statement that becomes part of your credit file and must be provided to anyone inquiring. Something like "....starting in 2xxx we became responsible for enormous medical bills brought about by Mr.Ys cancer. Of course his worsening condition also effected our earning ability and life in all ways. Try as we did, the extreme nature of these bills nd ever new ones proved impossible for us to keep payments current on. However, we endeavored to do so, even if late. The 2 bills listed as ABC & XYZ were in fact paid, and while the collection agency agrees, for reasons I do not understand they refuse to report that the debt is no longer outstanding....." that idea. That's why I'm not happy about paying the other debts. I have worked hard to pay off the two that I did. I feel I need to stop worrying about it and just take care of the matters that need to be attended to, such as my husband who has cancer, and may not be with me too much longer.