Need advice on paying OLD debt.

[knewcomb]

I went into my bank today to inquire about mortgage rates because I am looking to buy a home in the upcoming months. They notified me that I currently had an account in collections for the amount of $204 from 2008 and would not be able to acquire a loan until it was resolved or the debt fell off my credit report.

 

I want to pay the debt but by doing so it will cause my credit score to drop because the account will become current as opposed to 5 years old. 

 

For those of you who may be experts on this, what options do I have a getting this resolved without having my score take a big hit?

Edited July 31, 2013 by knewcomb

[UncleJak]

Are you sure you owe the $204? Make sure it isn't a glitch.
Asides from that...pay it. If it os paid in full the account should close and drop off your report. My wife is a administrative lending coordinator at a bank. If you need further info pm me.

sent barefoot from the hills of Tennessee

[Randall53]

you cant ask for better info than that..!!

[Sam1]

Depends on the type of debt, you can challenge them with the credit agencies and get it invalidated/wiped if there's insufficient data concerning it.

Also the type of debt has different sol's, and they differ from states. So a bad CC card debt with a company in KY may have a shorter or longer time from when it can be removed, than if the cc debt was from a company in tn.

It's extremely complex and impossible to say A, B or C will work with the info you posted

Edit - sorry hard to type, in the middle of the ocean at the moment Edited July 31, 2013 by Sam1

[knewcomb]

The debt is from a gym membership that was suppose to have been cancelled. When I left school to move back in with my parents I was told by the management that I would need to contact their billing, National Fitness, in order to have my contract cancelled. The person I spoke with told me I would need proof such as a bill or a rental agreement to show that I had infact moved. Since I was going back into my parents home, I had neither of those. After many calls of explaining my living situation they told me that they would cancel the contract and my account would not be charged any more. After that, my account went on to be charged twice more. They continued to inform me that it wouldnt. After a third time, I went and had my debt card cancelled so it would not be hit again. At no point in time after I cancelled my card did I ever hear from them again until I spoke with them today(almost six years). I do not have any documents to dispute the actual bill so I am in limbo of sorts on how to deal with it. I have been reading up on sending a letter asking for a pay for deletion, which will entirely remove the derogatory mark from my credit report if paid in full. 

[rugerla1]

The debt is from a gym membership that was suppose to have been cancelled. When I left school to move back in with my parents I was told by the management that I would need to contact their billing, National Fitness, in order to have my contract cancelled. The person I spoke with told me I would need proof such as a bill or a rental agreement to show that I had infact moved. Since I was going back into my parents home, I had neither of those. After many calls of explaining my living situation they told me that they would cancel the contract and my account would not be charged any more. After that, my account went on to be charged twice more. They continued to inform me that it wouldnt. After a third time, I went and had my debt card cancelled so it would not be hit again. At no point in time after I cancelled my card did I ever hear from them again until I spoke with them today(almost six years). I do not have any documents to dispute the actual bill so I am in limbo of sorts on how to deal with it. I have been reading up on sending a letter asking for a pay for deletion, which will entirely remove the derogatory mark from my credit report if paid in full. 

Gym billing departments are the Debil ! ! !

[knewcomb]

Yes, especially a billing dept that doubles as a collection agency. 

Edited August 1, 2013 by knewcomb

[runco]

If you owe it, the right thing to do is pay it regardless of your credit rating or not. 

[knewcomb]

If you owe it, the right thing to do is pay it regardless of your credit rating or not. 

 

I understand that and have no issue paying it. I would just like to do it in a way that it wont make me take another hit on my score and prevent me from owning a home for a the foreseeable future. 

[mk19]

Contact the credit agencies and challenge the charge. By not paying it you are not helping your credit score either, since it keeps showing as not paid and still owing. 

[glowdotGlock]

I have the same thing as the op except I'm not in the home market. 1 is $288 from 2010 and another $125 from 2011. I didn't even know til yesterday or I would've payed it years ago. I have decent credit but want better so I'm gonna just pay it off this week. Ki da answered my question too.

[AU_88]

Credit is nothing to mess around with. I'm going through some issues with a company that is servicing my student loans. They picked up the loans in June, so I called to see what my total payment was because I mailed the last payment to the previous company. I mailed what they told me to, and it was only dispersed to two loans out of five. I called they said they would redistribute my payment, but 14 days later it hasn't been done... So guess what, I'm sending a good bit of extra money this month because of their incompetences. It sucks, but again, credit is nothing to mess with.

[Guest 6.8 AR]

Since it is in collection(from whoever) get it in writing from the collection entity that upon receipt of the

funds paid the debt is satisfied in full and no other recourse can be had against you. You need it to take to

your lender for the explanation of the debt, and that it has been settled. If the collection agency doesn't

agree to this, challenge it with the credit rating agencies and prepare to take your lumps.

 

You owe the debt so pay it. Usually a collection agency will agree to fax a document to do this. I had to fix

people's credit for them a lot when I sold real estate. It amazed me how much stupid little things can screw

up credit, but many are fixable.

[Guest Keal G Seo]

I first have to address everyone saying if you owe it pay it. From his explanation he doesn't seem to really owe it but rather got screwed by a gym membership and has no recourse at this point...a common occurrence.

Second is that you have already said what your first move should be. Send a letter, return receipt requested (signature required), that asks for the "pay for deletion" option and be sure to state that you want it in a written agreement. If they go for it then pay it. If not, pay it off and make sure they update your credit report or request a new "zero balance statement" from them and update through the credit reporting agencies yourself. Your last option, and would be my choice (for a screwy company) if they didn't agree to a pay for deletion would be to just wait it out the year and a half and it will fall off your credit anyway. Everything but student loans fall off after 7 years.

[Guest tdoccrossvilletn]

Are you sure you owe the $204? Make sure it isn't a glitch.
Asides from that...pay it. If it os paid in full the account should close and drop off your report. My wife is a administrative lending coordinator at a bank. If you need further info pm me.

sent barefoot from the hills of Tennessee

Exactly

Except it will show as paid. They don't drop off your report though until about 7 years. Unless you have the collections company submit a letter to the credit bureau to have it removed. If you can't afford to pay the full amount often times the collections company will let you do a settlement for a percentage of the balance. Typically this would be about 35%-60%.

Take it from me a former collections agent that was collecting over 20,000 a month st a job before the economy tanked. Pay it in full then have it removed from the credit report by letter. It won't just drop off until its at 7-10 year mark.

Sent from my mind using ninja telepathy.

[RichardR]

Wrap a $1 bill around a brick, toss it through gym's plate glass window, attached with a note that reads "this is the first of two-hundred & four payment installments, call to cancel at anytime".

My guess is after making 5 or 6 installments they'll call to cancel the debt.

[tnguy]

Since you are looking at buying a house, depending on your timescale, you may want to just pay it. It may dent your credit score a bit but that shouldn't be a block to you getting a mortgage then (especially for such a small amount) and at least the clock starts ticking to it falling off completely.

 

If you are looking at a longer timescale, debts can't be chased up anymore after a while. We had a letter from some collections agency about (again) a gym membership my wife had from before we were married. What was originally something like $30 had multiplied to more than $200. It was outside the time so we told them to pound sand. Never heard from them again. The information is out there on the web but from what I recall, it sounds like it may not be too long.

 

Absent any proof that you don't owe the money, you might just try to negotiate with the collections agency. They probably paid a trivial sum for the debt so will probably be willing to take an offer. As Dave Ramsey says though, make sure you get it in writing before you pay.

 

 

Edit: Tennesse, 6 years.

http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php

Edited August 1, 2013 by tnguy

[Guest Keal G Seo]

Edit: Tennesse, 6 years.

http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php

Statue of Limitations on Debt is only for legal recourse, they can't take you to court after 6 years in TN...well they can but all you have to do is show up, quote the statute and you win. If you don't show up though they get the award.
It still stays on your credit for 7 years, that is standard industry practice.

[RobertNashville]

I went into my bank today to inquire about mortgage rates because I am looking to buy a home in the upcoming months. They notified me that I currently had an account in collections for the amount of $204 from 2008 and would not be able to acquire a loan until it was resolved or the debt fell off my credit report.

 

I want to pay the debt but by doing so it will cause my credit score to drop because the account will become current as opposed to 5 years old. 

 

For those of you who may be experts on this, what options do I have a getting this resolved without having my score take a big hit?

Most any lender is going to require an open collection/debt to be paid before they'll approve a mortgage.  If you are looking to buy a home soon then "fighting it", even if you don't owe it, is probably not worthwhile; especially so given the relatively small amount.

 

One thing you need to do before you pay anyone anything is to make absolutely sure "who" you owe the debt to. Just because someone is reporting it to the bureaus doesn't automatically they have own it or, if they don't own it, have the legal authority to collect on behalf of whoever does own the debt (there are plenty of collection agencies out there who will be happy to take your money even if they once did but no longer represent the debt owner).

 

When you know for sure who needs to be paid you can ask that, in return for payment in full, they also remove the account from your bureau reports. They have no obligation to do that but they might...it certainly won't hurt to ask.  Even if they don't remove it but only update it to show it's been paid, I doubt it will harm your bureau scores enough to disqualify you from obtaining your mortgage.

[Guest Lester Weevils]

Here ya go, though it wouldn't be as impressive for $204-- In that case, paying in pennies might be better--

 

http://www.myfoxny.com/Story/22990132/man-repays-insurance-money-with-4-tons-of-coins

 

A southern Illinois businessman has paid off part of a court-ordered legal settlement with nearly four tons of quarters packed into dozens of bags... So in protest, Herrin repaid nearly a third of the money — $150,000 — with 50-pound bags of quarters he had trucked in by the Federal Reserve bank in St. Louis. The coins were delivered Wednesday to a Marion law firm ... Herrin says he paid in quarters because paying in pennies wasn't feasible.

 

Edited August 1, 2013 by Lester Weevils

[RobertNashville]

...Absent any proof that you don't owe the money, you might just try to negotiate with the collections agency. They probably paid a trivial sum for the debt so will probably be willing to take an offer. As Dave Ramsey says though, make sure you get it in writing before you pay.

Average amount paid for most debt by a junk debt buyer is about $0.06 on the dollar so they have a HUGE amount of wiggle room to settle and still make a profit. Further, few debt buyers every have the documentation to actually prove the debt even exists much less any details about or even who truly owed the debt...trust me, these companies are lower than the sea floor (even lower than whale excrement) and they have one job, to get money...from the actual debtor...from someone with a similar name...even someone whom they can bully into paying.

 

With a small debt like this I doubt they'll be willing to negotiate much. However, getting paid in full may entice them to agree to stop reporting the debt at all in which case everyone wins. ;)

[knewcomb]

Thanks for all the advice guys. I wouldnt really try to negotiate the amount down as it such a trivial amount. I think I am going try and have a pay for deletion though. No matter the outcome, I will have something in writing saying the debt will be free and clear if paid otherwise there wont be any payment. Not having it in writing is what caused all of this to begin with

[knewcomb]

Little bit of an update. I received a letter from the CA today on their letterhead that read as follows,

 

 

Dear *******,

 

Per our discussion, we are willing to resolve the account by accepting $204.76 to pay your past due account in full. Payment must be received by 8/15/2013. Please take care of this as soon as possible so that we may notify the credit bureau that your account is now resolved. 

 

To ensure that your account is properly credited, make your payment to National Fitness Advanced Collections Dept at the address above and include your membership account number in the memo of your check or on your money order. 

 

 

So, is this sufficient enough info to say that it will be completely resolved up payment?

[Sam1]

Yes to show it is paid up, but expect it to show on your CR from 5-6 years from the time it is paid, not from when the account was started.

[knewcomb]

Great. I may go ahead and respond with a pay for deletion letter.