Bad Credit Help - What To Do About Your Debt

If you are looking into fixing your credit and wondering what to do about you debt, your not alone. Many consumers need bad credit help and are struggling to stay a float, especially in today's economy.

You first should realize that any debt that is older than 7 years has expired and is beyond the statute of limitations. This means that you do not legally owe the debt and that it can no longer be a piece of information that is on your credit report.

The most common violation by collection agencies on the Fair Debt Collection Practices Act is, they will report negative information to the bureaus regarding your account beyond the 7 year time limit. 

This practice is common and prevalent within the debt collection world and flies in the face of public opinion that bad credit falls off your credit report or that you only live with bad credit for 7 years.

The reality is many consumers live with a bad credit item much longer than 7 years and in spite of it being clearly illegal the collection agencies continue to report information to the credit bureaus. 

One of the reasons collection agencies feel they can operate this way is because consumers are the only ones that can potentially report the violations to a regulatory agency.

It is rare for consumers to report debt collectors but it is one of the most commonly reported complaints to all 50 state attorney generals. The world of debt collection is frequently a shady, less than ethical, and all-out vicious industry to be involved with on any level. 

The government regularly hands down fines to these companies for violating government regulations.

We must mention that it is not unheard of for collection agencies to seek a legal judgement, where a creditor goes into a legal courtroom and files a lawsuit against a consumer. 

However the debt collectors have done this time and time again to only discover that they have sued the wrong person, there are multiple reports of collection agencies filing lawsuits against individuals that never had an account with the original creditor!

In other words they sued someone saying that they owed a debt and that person was never a customer of the business whom the debt was owed. We don't want this article to become a side note of how collection agencies waste taxpayers money so let us move on to a legitimate debt that is inside of the seven-year statute of limitations that you are being contacted about.

Debt Settlement Agreement & Negotiations

You not only have to worry about collection agencies ignoring the seven-year statute of limitations law, you also have to worry about collection agencies contacting you and collecting payment on a account that they no longer legally own.

For example a debt collector will contact you for a period of time and if they are unsuccessful in collecting payment that debt collector will report negative information to the credit bureaus and will sell the legal collection rights to another debt collector. 

This new debt collector now has the legal rights to collect payment on your account and the previous collection agency has relinquished these rights when they sold the account.

According to insiders many collection agencies will continue to contact consumers to pay a debt even though that agency no longer legally owns the debt. In other words complete blatant disregard of federal law and greed on behalf of the debt collectors could leave you in a tough spot!

Make sure to protect yourself and if you need some expert help we would encourage you to turn to a reputable credit attorneys. They are pros and can ease the tension, frustration, and aggravation of trying to deal and negotiate with blatant law breakers! And you can rest assured that they will repair your credit of negative listings.

Improve Credit - How To Deal With Outstanding Debt Collections

If you are working to increase your credit but are being contacted by a debt collector or you are aware of any legitimate outstanding debts that you have, then you need to settle these debt accounts. 

The first and most important factor you need to look at before paying any collection agency is, how old is your debt?

Federal law has clearly stated that the maximum amount of time any negative debt collection account can remain on your credit report is for 7 years. This seven-year time window begins to expire from the first month, you missed a payment with the original lender.

One of the most common methods that collection agencies use to influence an individual to pay is by reporting negative information to the credit bureaus about that account. 

However the collection agencies rarely take into account the statue of limitations or the 7 year time window that bad debt can be reported to the collection agencies.

In other words if your debt is older than 7 years, you don't have to pay it! You don't have to pay this debt because you are no longer legally responsible for it. 

You may feel some moral obligation to pay this debt however there is no legal, or financial need to and you don't need to in order to clean up your credit.

Very commonly debt collectors will continue to report a negative account to the credit bureaus way past the legal time limit, which is a result of two factors. 

The first factor is that without credit bureau reporting many consumers would not feel any need to pay off an old debt, and the second reason is many debt collectors view a purchased debt account as having 7 years of credit bureau reporting from the moment the collection agency purchased the account.

To clarify this many debt collectors will report your account to the credit bureaus for 7 years from the moment they purchase your account. Collection agencies don't get involved with the purchasing of debt accounts until the account is at least 6 months delinquent with the original creditor. 

The point is collection agencies rarely follow industry regulations and instead are very motivated by profits, potentially at your expense. You should be caution when dealing with debt collectors.

If you are debt is within the seven-year statute of limitations, then you will need to negotiate a settlement payment. When you communicate with the debt collector and reach an agreement you must get the debt collector to agree to stop reporting your account information to the credit bureaus in exchange for your payment. 

If you forget to get the debt collector to agree to this, when you pay them and settle this debt you will continue to live with bad credit from the account on your credit report.

This request by you, is not uncommon and the collection agency will not think twice about agreeing to it. It would be wise to get this agreement in both oral and written form, god for bid the collection agency does not honor their word.

You also need to be aware that collection agencies will purchase debt accounts for just pennies on the dollar. Let's use an example to fully illustrate, lets say that you have a $2000 debt that you are being contacted about.

The debt collector that is contacting you about this debt has likely purchased your debt for just a fraction of that $2000 balance. The actual amount paid will vary based upon the age of the debt, type of debt, and many other factors. There are published reports of one collection agency buying debt accounts for less than $.03 on the dollar.

Using the earlier example that collection agency purchased your debt account for just $60 and is now contacting you to pay them $2000. Collection agencies will commonly settle an account for much less than the total balance. 

We suggest starting your negotiations at 20% of the total owed however you can make any offer no matter how small, worst thing that happens is they say no.

If you would like help with improving your credit or on how to deal with old debts, we would encourage you to consider professional credit report lawyers to assist you. 

This will enable you to take a stress free, hands off approach to fixing your credit, and enjoy the comfort on knowing you have an expert working for you!