“Your best option is to avoid collections altogether.”
4. Paying “In Full” vs. Settling
The credit bureaus have strict policies regarding col-
I always advise clients to pay a collection, or at the
lections. The only way a collection will be removed
very least, try settling with the collector. Remember,
is if it is an error or if the statute of limitations for
the collection agencies pay pennies on the dollar for
reporting has expired. Think about it this way; if the
these accounts. Try to negotiate and settle the debt for
credit bureaus removed a collection just because it
as little as possible. Start by suggesting 20% of what
was paid, how accurate would their reporting system
they are asking and go up from there. When you do
be? Did the collection exist? Absolutely! If they were to
come to an agreement, get it in writing before you
remove the collection it would dilute the value of their
make the payment.
credit reports. This is why the credit bureaus will not
honor those pay for removal deals. Don’t fall for it un-
5. Pay for Removal
less you have it in writing to back it up if the collector
Some shady collectors will tell you whatever you want
tries to renege on the deal.
to hear if they think it will help them get you to pay
the debt. If they offer to remove the collection from
6. To Summarize:
your credit reports in exchange for payment, don’t
Your best option is to avoid collections altogether.
believe it unless you get it in writing first.
However, if a collection is unavoidable, the next best
thing is to minimize the damage by paying it or settle
it as quickly as possible. Be sure to get everything in
writing, including a receipt, and make sure that the
collection agency updates the account as “paid” in
your credit report.
Author: Edward Jamison is president of Los Angeles-
based Jamison Law Group, one of the nation’s lead-
ing credit restoration law firms and the creator
of Credit CRM. Learn more and get a free work-
book at www.CreditCRM.com.
www.coloradohomeownermag.com www.coloradohomeownermag.com
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