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That bill has been sitting at the bottom of your paperwork
pile for a while. Despite your best effort, ignoring it hasn't made
it disappear.
Now you've acquired somebody who wants to be your
new best friend -- a debt collector.
You can't wait any longer to face it. In fact, many
credit experts say too often consumers dodge the opportunity to
resolve their money issues with the debt collector.
"If you know you lost your job and you don't have
the money to pay your creditors, don't be reactive, be proactive,"
says Robin Holland, spokeswoman for Equifax, a credit reporting
agency.
Many people don't know what to do when it comes to
working out a deal with a debt collector. The following questions
could help:
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True or false? |
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True or false:
An account sent to collection still can be
deleted from your credit report.
That's true. A deletion is possible, but that doesn't mean
all creditors will agree to it, cautions consumer credit attorney
Edward Jamison of the Jamison
Law Group P.C. in Los Angeles, which specializes in helping
consumers get their credit ratings restored.
Even if the collection agency
agrees to a deletion, it's only of limited value.
Maxine Sweet, spokeswoman for Experian, explains that
if the deletion letter came from the collection agency, only the
collection account would be removed. The original credit or account
from the creditor would remain on the report.
"The original
creditor can verify to us that the original debt was an error and should not have
gone to collection and instruct us to remove both the original account and the
collection account," Sweet says. Jamison explains the creditor
deletion gets rid of the account completely. This, in turn, "helps the credit
score because it is like it never happened, where a paid collection means you
were not creditworthy in the past." He advises that if the
consumer is able to get a deletion, have the letter faxed stating the terms. For
instance, it could say: "I, ABC Collection, agree to delete John Doe's collection
account with the account number 1854642 in return for John Doe paying X dollars."
Make sure it's signed by someone at the company.
The consumer can't demand a deletion without reason,
warns Pamela Baird, a collection attorney for Lacy Katzen LLP in
Rochester, N.Y.
"If it's disputed and they investigate it and they
find the debt has been reported in error or inaccurately, they delete
it," she says. "They are telling the credit reporting agency they
want that trade line taken off the consumer's credit report."
Craig Watts, public affairs manager at Fair Isaac
Corp., says some creditors don't often provide deletions because
it can be deceptive.
"One
of the main reasons lenders do business with credit bureaus is because lenders
want a better view of the risk involved in extending credit to any individual,"
he says. "Deleting a collection account from a person's history is not in the
best interest of the lender because such information is important to a fair assessment
of the person's credit risk." | 
