Credit Question.

[DayLaPaul]

So if I default on a loan, I should not pay the collections agency, and after a few months(??) it will just disappear entirely, even off my credit report?

Your statement confused me.

If you default on a loan and it shows on your credit report, either negotiate a PFD (pay for deletion) or wait 7 years (10 years on student loans I think) for it to fall off your credit report.

From a business standpoint, those are your only good options. If you pay a collection agency, but don't negotiate the PFD, you are essentially throwing your money away.

 

[highland145]

It isn't really being a deadbeat anymore than the company you owed it to. They took a writeoff and they aren't out at all. The company took (often) taxpayer or bank money in your stead. Why would you pay a new company collecting on it, when that company likely paid less than a penny on the dollar, and you are paying back full price?

Bullshit.

The company took (often) taxpayer or bank money in your stead.

Links, facts, graphs, charts,.............? Appears like I'm still screwed out of $25.3K for 2010. I'd like to know where to get some of this free $$.

 

[bobdole369]

So if I default on a loan, I should not pay the collections agency, and after a few months(??) it will just disappear entirely, even off my credit report?

Your statement confused me.

You totally missed that credit school didn't you.

if you default on a "credit" tradeline, be it a loan, car payment, credit card, hospital bill, etc. the date of last activity (the last time you paid them something) is when the clock starts ticking. Something ike 90 days after 7 years from that point is the last day that tradeline can exist.

If you make a payment or pay off the debt - it resets that date. So if you found an old hospital bill from a broken arm when you were 16 on your credit report after 6.5 years, and simply pay the x-ray place $100 for this old bill that might have already been paid by insurance, what happens is now today you start over with a new collection account that says in the comments "paid". It lasts another 7 years (plus 90 days I don't recall why but there is some period of 90 days in here somewhere)

Credit items have a negative or positive effect. A chargeoff is pretty serious - a defaulted loan even more. But all things credit go down in effect with time.

So where you might have had a credit score of 720 before with a 6.5 yr old $100 collection - by paying it you make a brand new collection account (that says paid), with maximum negative effect. So now your credit score might be 680.

This is why it is counterproductive in a lot of cases to pay bad debt.

 

[ViviTheMage]

So technically, if you wanted to get rid of 10,000$ CC debt, and wanted to be 'lazy' about it. You could default on it, let it go to collections, tell them you'll pay 6k for a PFD, you would only be out a shitty credit score for a few months/year? but get "40% off" ?

Or am I oversimplifying it, and a PFD for 10k debt would never be that low?

I have never dafaulted/missed payments or anything like that, so this is new territory for me.

 

[bobdole369]

Bullshit.


Links, facts, graphs, charts,.............? Appears like I'm still screwed out of $25.3K for 2010. I'd like to know where to get some of this free $$.

Big companies do it all the time. They writeoff debt and bury it in some other operation, do creative accounting, etc. It's rarely just taken as a loss. Subsidies, tax havens, etc. They have excess money that they don't want to pay taxes on, so combine that loss into that unit.

Who took $25,300 from you? Why didn't you have an accountant to bury it in some offshore firm?

 

[highland145]

Unfortunately (if I am reading his post correctly) he has already paid off that debt but didn't have an agreement in place for them to delete negative trade line. There's nothing he can do at this point except ask them nicely to remove it, which they have no obligation (or incentive) to do.

My take on it too. I meant your idea prior to paying. Time or a dispute that they don't rebut might be the only options now.

 

[highland145]

Big companies do it all the time. They writeoff debt and bury it in some other operation, do creative accounting, etc. It's rarely just taken as a loss. Subsidies, tax havens, etc. They have excess money that they don't want to pay taxes on, so combine that loss into that unit.

Who took $25,300 from you? Why didn't you have an accountant to bury it in some offshore firm?

And you're busting on Vivi....

 

[bobdole369]

So technically, if you wanted to get rid of 10,000$ CC debt, and wanted to be 'lazy' about it. You could default on it, let it go to collections, tell them you'll pay 6k for a PFD, you would only be out a shitty credit score for a few months/year? but get "40% off" ?

Or am I oversimplifying it, and a PFD for 10k debt would never be that low?

Except they will never agree to a PFD for 6k. Its all relative. If there is a possibility to get the 10k they will pursue you. Suing you, obtaining garnishments, making you sell the car and house, etc.

Its not a simple matter to get that big of a debt wiped. Little hospital bills are much simpler to handle.

 

[ViviTheMage]

Except they will never agree to a PFD for 6k. Its all relative. If there is a possibility to get the 10k they will pursue you. Suing you, obtaining garnishments, making you sell the car and house, etc.

Its not a simple matter to get that big of a debt wiped. Little hospital bills are much simpler to handle.

Just curious, if I ever run into this issue, haha.

What if I had say..1500 loan I had to pay the hospital?

Actual scenario, GF got a bit hosed on a hospital bill, but is making payments on it to the hospital, which has been easy for her to make (no collections or anything).

 

[bobdole369]

Just curious, if I ever run into this issue, haha.

What if I had say..1500 loan I had to pay the hospital?

Actual scenario, GF got a bit hosed on a hospital bill, but is making payments on it to the hospital, which has been easy for her to make (no collections or anything).

Pay your bills man. It's not a way to live scott-free. Just the way to keep yourself from being completely screwed by a system that doesn't care.

 

[ViviTheMage]

Pay your bills man. It's not a way to live scott-free. Just the way to keep yourself from being completely screwed by a system that doesn't care.

I have no problems paying what I owe, just curious.

 

[DayLaPaul]

Just curious, if I ever run into this issue, haha.

What if I had say..1500 loan I had to pay the hospital?

Actual scenario, GF got a bit hosed on a hospital bill, but is making payments on it to the hospital, which has been easy for her to make (no collections or anything).

Hospital bills are unique in that HIPAA laws are at play. I believe there are ways to get a hospital debt removed from your credit report base on that. I don't know any of this firsthand, because I've never had hospital debt, but I did come across that stuff when doing my research on my own credit issues.