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    Collection Companies & Paying Off Debt

    Hello all.

    I am a recent college graduate and raked up two debts that I failed to pay.

    The first was a utility bill from an apartment that I moved from. My account remained open and I was being charged for whatever usage the new tenants incurred.

    The second bill is from a hospital. I went in, they didn't do a thing, sent me home, and then charged me close to $600.

    At the time, not only did I believe I was being charged unfairly, but I also did not have the means to pay these bills. I have the means to do so now (and I'm not sure I would have paid them even if I did have the money), but the bills have since gone into collection.

    What effect would paying off these bills now have? They are ruining my credit score. I'm willing to pay them if it will help any, but if it won't, then I will stick with my principles and not pay the bills.

    Thanks for the help.

    #2
    Essentially, if you clean up these debts, then yes, sooner or later your credit score will remedy itself.

    Just out of curiosity, why didn't the utility company shut off the utility when nobody was paying the bill?

    As far as the utilities, it is your responsibility to inform the utility company that they need to shutoff the utility (telephone, gas, electric, & water) as of a certain date when you were no longer planning to live in the apartment.

    If your apartment owner (landlord) is paying the utility in question, then that's not your responsibility to call and discontinue service. But before moving, that it one of many things you should have done for each of those utilities that you are responsible for (in other words, those utilities you personally pay).

    Question the hospital charges, find out what they are charging you for, and pay what you owe. Be aware that even if they "did nothing" they still spent time checking you... you still take up resources. And taking it to collections is not without cost either.

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      #3
      Seeker, I am fairly certain that I called to cancel my bill. I agree that that was my responsiblity. As to why the utility company let someone use their services for free for a year is beyond me. I have no further comments on hospital situation.

      You say that sooner or later the credit score will remedy itself, but this is true wether I pay the bills or not. Will paying the bills now "fix" this problem faster? Will there be a note on my credit report that I tried to fix the problem? Is there any benefit to paying of these debts now?

      Thanks,

      Steven

      Comment


        #4
        Yes, the sooner you pay your debts, the sooner your credit score improves. Your report will still show that you had an account that went to collections, but it will also show that the debt has been settled. That looks better than a debt in collections that is still outstanding. Bottom line is you should always pay your debts, sooner rather than later.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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          #5
          Thanks for the response disneysteve. I'll call the collection companies these week and settle these outstanding debts.

          - Steven

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            #6
            Can we get an update Steve? Would like to know what the CAs said!

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              #7
              I'm still in the first stage of negotiations with the CAs, but I will re-visit this thread once I have something to report.

              Comment


                #8
                I have a similar experience. I had some medical bills that went to collections and I wanted to straighten it out as soon as possible. I went ahead contacted the collection agencies got on a payment plan and in short time had all outstanding debts cleared up. This did help my credit score, however......

                I could have done some things differently in order to improve my credit score even more.

                First of all, it is almost 2 years later and those collections still show on my credit report, albeit as paid- they still harm my score. Not paying would harm my score more, but there are some better options.

                I just called the collection agencies and asked for a "goodwill removal". One agency agreed and my score shot up. I went from a paid/current to no report and it helped a great deal. Some of the other collection agencies did not have so much goodwill and paid/current remains.

                Don't get stuck begging for goodwill as many collection agencies do not remove collections, even if they are in good standing (paid/current).

                Your first step should be to call the hospital, doctors office, utility company, etc and see if you can settle up with them. Generally they lose money if the collection agency gets the money for them. So paying them directly is usually appealing. Be sure they agree to tell the collection agency they are collecting the money so the collection agency has nothing to report. Again be sure they take your bill out of collections if you pay them directly.

                I believe this should work as one of my bills was in collections, but I didn't know and paid the hospital directly and it has never shown up on my credit.

                If this does not work then you must try to barter with the collection agency. Ask if they will remove your info from your credit report once you pay. I feel this is worth way more than the 10% discount they are willing to give you if you pay in full. You may even be able to get a discount and a removal if you play nice.

                I hope this makes sense and if I am wrong on any of this if someone could please point out inaccuracies. Also, Any elaboration would be helpful.

                Thanks and good luck

                Comment


                  #9
                  Depending on how old the hospital debt is, your position is a little stronger in a sense. As time goes on and so many people don't pay their outstanding debts, sometimes those guys are willing to negotiate a settlement with you that is lower than the original bill.

                  To them, some money is better than no money.

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                    #10
                    I think you should pursue a pay-for-delete option and pay the full amounts. But, before making any payment I would get all terms in writing.

                    Comment


                      #11
                      Paying off your debts is important, but too many people forget that it's also important to negotiate credit scores as part of the process. A "paid" collection is just as damaging to your FICO score as an "unpaid " collection, so paying off a debt doesn't mean your scores will improve right away.

                      Also, most collection agencies won't agree to any kind of a pay-for-delete these days, but there are other options. I'm not sure how this has all played out for the OP, but hopefully he didn't ignore his credit score as part of the settlement process.
                      Rock climber, ultrarunner, and credit expert at Creditnet.com

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