Phoenix Debt Attorneys of Instant Settle Consultants, PLLC

It’s no hidden secret that debt collections are bad for your credit report. Debt collection is a $15 billion dollar a year industry and it’s blooming fast. Any past due account, debt collections included, can have a negative effect on your credit score for as long as it is on your credit report. Potential creditors and lenders will question your creditworthiness when they see collection accounts on your credit report. If you are working hard on repairing your credit, or cleaning up your credit report, you might reconsider whether you should pay a collection, especially if it is a really old one. One reason to pay a debt in collection is aggressive collection practices. After six months have passed, when the debt charges off, it may be sold to a more aggressive collection company, or it may be turned over to a lawyer for court action.

The second reason why you should not ignore a debt in collection is an unwanted wage garnishment or bank account levy. After a certain period of inactivity on an account, a debt then becomes time-barred and debt collectors are no longer allowed to sue you for it. This period of time is known as the statute of limitations and varies by every state. If the statute of limitations has elapsed, it is illegal for a debt collector to sue you. However, it is up to you to prove that the statute of limitations has passed if they do end up suing you. You need to find out the statute of limitations in your state. This will hopefully impact your decision to pay an old debt. Making a partial payment, a payment arrangement, or accepting a settlement offer on an old debt can restart the clock, giving the creditor or collector more time to sue you for that debt.

If the debt is legitimately yours, the right thing to do would be to pay it back. You’ve already consumed the goods or services financed by the debt, which means it is your responsibility to pay for it. For old debt collections, you can have the debt collector validate the debt, send proof that the debt is indeed yours. People do wonder though, maybe paying the debt in collection will raise my credit score. Well no, paying the debt in collection will not raise your credit score. However though, paying it will mean the account is reported as paid on your credit report. If you already have stated that you are not looking to purchase any large items any time soon, but you have learned that sometimes life doesn’t go exactly as planned, just pray and hope for the best.

The outstanding collection account will stay on your credit report for seven years from the first date of delinquency. It is possible that you will have to borrow money, seek new employment, be considered for a promotion, or apply for or renew insurance or try to rent an apartment in that time period. All of the aforementioned can and will often check your credit report before deciding if they can trust you. Determine what you can afford to pay monthly on the debt, and then contact the collector to set up arrangements to pay.