Both Chargeoff and Resulting Collection Are On My Credit Report
Q. I defaulted on a credit card account 2 years ago. The debt went in to collections. Now I am looking to clean up my credit and pay off my debts. I pulled my credit report and noticed that both the charge off AND the collection are on my credit report. My questions are:
- Is this legal?
- Do I have to pay both of these debts even though it’s a duplicate?
A. To answer your first question, yes, both the charge off and the collection can be on your credit report. However the collection is tied to the original account, meaning that it can’t stay on your credit report any longer than the charge off from your credit card.
The second question you asked was whether you had to pay both of the accounts: absolutely not! If you pay the collection account, this will fulfill your obligations in full on the debt. I would be careful in dealing with the collection agency, though, both financially and how it will affect your credit.
- Don’t pay the full amount of the debt. The collection agency most likely spent about 5 cents or less on the dollar. You can easily get them to take 50 percent of the total or less. Also remember that most likely they will have added on interest and “late-pay” fees. Ignore these. For instance, if you defaulted on a $2000 credit card, the resulting collection account can be more than $3000, due to what I would call “arbitrary” fees. Base your settlement offer on the original $2000 amount.
- If you make a deal with the collection agency, don’t even think about making a payment unless you have a deal in writing.
- As part of your settlement agreement with the collection agency, require them to delete the listing from your credit report. Having them report it as “paid in full” or “paid in full, satisfactory” will not help your credit report. Any collection, paid or not, is a bad mark. If the collection agency tells you they can’t remove the collection because it’s illegal, they are not being truthful. Tell them if they want the money, they can remove the listing.
- Once you have settled the debt with the collection agency, it’s time to update the charge off status on the original account. Send a copy of the settlement agreement (another reason to get your settlement in writing from the collection agency) to the credit card company. They should update the status of the account to zero balance, paid charge off or “debt settled for less than owed.”
For information on how to deal with collection accounts, read our article “5 Ways to Deal with Collections“.
Similar Posts:
- TransUnion Won’t Remove Account From Credit Report
- You Can Control The Debt Relief Process
- Real Life Debt Settlements
- Debt settlement as an alternative to bankruptcy
- Second Mortgage Shows Open Balance on Credit Report After Foreclosure
