Category Archives: Collections

Not giving in to unfair doctor bill? It’s going to cost you!

This post originally appeared March 9, 2017 on CreditCards.com as “‘Refusing to pay bills on principle has consequences

By Barry Paperno

Dear Speaking of Credit,
I have four medical bills I tried disputing with the family practice they originated from. The doctor coded my visit in such a way that I disagreed with. I had moved to a new city and was simply establishing a relationship with a local practice in case I needed a doctor. He took my medical history and then billed the visit as if he diagnosed my illnesses. I was floored when I received the bills.

However, I didn’t get anywhere with the practice when I responded to their charges. They eventually went to collections because I refused to pay them. They are still showing active in collections, and my credit score took a serious hit because of them. What do you suggest I do to remedy this situation? I’m so frustrated! – Mary

Dear Mary,
I’d be frustrated, too! And while you haven’t shared the amount of these bills, this major misunderstanding is clearly going to cost you plenty – both in money and in your credit score.

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Debt buyer/collection agency doing right by consumers

This post originally appeared February 9, 2017 on CreditCards.com as “‘Pay-for-delete’ debt settlement comes out of the shadows

By Barry Paperno

Heard of Encore Capital Group? Or maybe, like millions of consumers, you’ve seen the names of its subsidiaries, Midland Credit Management or Asset Management? They’re big players in the world of debt-buying, where some very big credit reporting and scoring changes affecting millions of consumers are in the works.Encore Capital Group, the huge (more than $1 billion in revenue annually) debt-buyer known to millions of debtors by its subsidiaries – Midland Credit Management, Midland Funding, Asset Management and Atlantic Credit & Finance – announced in January 2017 it has imposed a new credit reporting policy that has already affected more than 1 million of their debt-holders:

  • If more than two years have passed since the debt became delinquent, a collection account will be removed entirely from a consumer’s credit report once paid in full or settled for less than the total due.
  • For newer debts not yet appearing on credit reports, the debt will be kept off the credit report if payments begin within three months of the initial collection notice mailing, or as long as payments are made each calendar month until the account is paid in full or settled.

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Left country for 6 months & forgot about card payments

This post originally appeared January 12, 2017 on CreditCards.com as “Your 6-months-with-no-payment credit score comeback plan

By Barry Paperno

Dear Speaking of Credit,
I went to travel to India for six months. Forgot a credit card payment for that long and the communications sent to my home were not accessible. In spite of 30 years of an excellent score, it went down from 830 to 640. How can I revert to my good score? The credit card company responsible for lowering my score refused to correct it. What should I do now? – Rajagoapalan

Dear Rajagoapalan,
If it hasn’t happened yet, you’re about to learn from the school of hard knocks just how hard it can be for a credit score to recover following six months of late payments on a single account. As the strongest predictors of future credit risk, missed payments are the hardest mistakes for your score to overcome, particularly when compared to the damage from high card balances, new accounts, inquiries and other red flags to future trouble.

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Look to score factors for culprit in 100-point loss

This post originally appeared November 10, 2016 on CreditCards.com as “Find the reason for a sudden 100-point credit score drop

By Barry Paperno

Dear Speaking of Credit,
My TransUnion score dropped by almost 100 points because of a credit inquiry and a collection that was removed. I’m confused. I thought it would rise because of the removal and I know one inquiry wouldn’t drop it that much. Help me understand what’s going on please? – Tanika

Dear Tanika,
I can see why you are puzzled. You’re right that an inquiry alone won’t lower a score by that much. On average, an inquiry tends to ding your score by about 5 points. But 100 points? Wow. Something else is going on. Let’s try to figure it out.

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Late child support payments may not hurt your score

This post originally appeared August 11, 2016 on CreditCards.com as “How delinquent child support affects credit scores

By Barry Paperno

Dear Speaking of Credit,
How do delinquent child support payments affect credit scores? – Russ

Dear Russ,
There are three common ways for child support debt to appear on a credit report. Two can affect your credit score and one cannot.

1. Collection
As with any other form of past-due debt, a collection item on a credit report for delinquent child support debt can seriously hurt your credit score. Collections for unpaid child support most often originate with either a state child support enforcement agency or an individual custodial parent turning to a collection agency for help.

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Know which debts do & don’t appear on a credit report

This post originally appeared July 7, 2016 on CreditCards.com as “Score damage increases if unpaid debt goes to collections

By Barry Paperno

Dear Speaking of Credit,
I owe around $1,000 to the state Bureau of Motor Vehicles and have had my driver’s license suspended. I also owe around $800 for emergency ambulance visits to the emergency room. All of these are 2 to 3 years old. I received a collection agency notice for the ambulance charges, but only a collection notice from BMV for BMV fines (not from collection agency). My question is which of these affected, or are still affecting, my credit? − JIT

Dear JIT,
How − or whether − a debt is reported to the credit bureaus can make a difference between a little credit score damage and a lot. To minimize the damage to your credit score from unpaid debts, it’s important to understand what kinds of debts you have, their stages of delinquency, and whether you’re about to take another hit from another negative item being reported to the credit bureaus.

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Collection missing from credit report. Too good to be true?

This post originally appeared May 26, 2016 on CreditCards.com as “Why an old debt may vanish from credit report

By Barry Paperno

Dear Speaking of Credit,
I noticed a collection account came off my credit report, and the account is 4 years old. Is it possible that it came off only because a new collection agency bought the debt? Could it reappear on my credit report soon? – Scott

Dear Scott,
If a new agency recently bought the 4-year-old collection debt, then yes, it’s possible that recent changes to how the credit bureau reports the debt – new agency name and contact information, for example – could be responsible for its unexpected removal. And yes, in this situation I would expect it to return to your credit report sometime soon.

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Good news for New Yorkers with paid collections

This post originally appeared May 12, 2016 on CreditCards.com as “Some states offer exceptions to credit reporting rules

By Barry Paperno

Dear Speaking of Credit,
Is New York the only state that keeps negative items on your credit file for seven years? Is there any current legislation pending to change this? Second question: I filed for Chapter 7 bankruptcy about eight years ago, but before it went through I changed my mind and didn’t actually go through with it.

I received papers from the court stating “bankruptcy dismissed.” This shows up on my credit reports as “bankruptcy dismissed,” which frankly is just as bad as going through the bankruptcy in the first place. I’ve been trying for the past eight years to have this item removed, and finally only one bureau took it off my profile. If I didn’t actually go through with it and continued to pay my creditors, why is it so difficult to have this item removed. It’s like false advertisement on my credit! I’m innocent! – Marie

Dear Marie,
No, New York isn’t the only state that keeps (most) negative items on your credit file for seven years. The overriding set of rules that establish how long negative credit bureau information can remain on your credit file comes from a federal law applying to all states, which regulates credit reporting across the U.S.: The Fair Credit Reporting Act (FCRA), enacted in 1970, and later amended by the Fair and Accurate Credit and Transactions Act (FACTA) in 2003.

While the FCRA limits on credit reporting cannot be exceeded, some states have passed laws putting tighter restrictions on the length of time credit bureaus can continue to report certain types of information. For example:

  • New York law requires that paid (satisfied) civil judgments be removed from credit reports within five years of the filing date – the FCRA allows them to be reported for up to seven years.
  • New York law also requires that paid collections be removed within five years of the date paid – again, the FCRA specifies a maximum of seven years.
  • California law puts a limit on the reporting of paid (released) tax liens at seven years from the date paid and 10 years from the filing date, paid or unpaid. The FCRA does not restrict the length of time unpaid tax liens can be reported and, for paid liens, allows seven years from the date paid.

To your question about any pending credit reporting-related legislation, there could be good news for New Yorkers with credit reports showing medical debt that’s either been paid or is being paid through insurance. A March 2015 settlement between the New York Attorney General and the big three US credit bureaus – Equifax, Experian and TransUnion – provides for some major credit reporting changes, such as:

  • 180-day waiting period before reporting medical debt. To allow time for insurance and other means of payment to run their course, a medical debt must be past-due for a full 180 days before it can appear on a credit report.
  • Removal of medical debt from credit reports. Credit reports can no longer show medical debt that’s been paid in full or is being paid by insurance.
  • Credit reports can only include debt resulting from a contract or agreement to pay. No longer will collection agencies and debt buyers be able to report debts resulting from traffic tickets, library fees, government fines or any other debt not previously agreed to.

Addressing your dismissed bankruptcy, you might rightfully think that when a bankruptcy is dismissed and the debts are not eliminated it’s a case of no harm, no foul. Yet regardless of any changes in the status or outcome following a public record filing, it is extremely difficult to have that public record item – bankruptcy, tax lien, judgment – removed from your credit report, as long as it belongs to you and the filing date falls within its legal expiration date. A couple of reasons for this stubbornness by the credit bureaus include:

  • Creditors who rely on the use of credit reports in their credit decision-making processes consider this kind of information valuable.
  • Research conducted by credit scoring companies, such as FICO, has found this kind of data to be highly predictive of how a consumer is likely to pay future debts.

And speaking of credit scores, your comment that having dismissed the bankruptcy is “just as bad as going through the bankruptcy in the first place” is not only accurate, but for your score, it’s often worse. Here’s why:

Discharged bankruptcy. For credit accounts with balances discharged, essentially eliminated, through bankruptcy, the consumer’s credit report shows a balance of $0 for those accounts. As a result, those debts are no longer included in the credit utilization (balance/limit ratio) and other debt-measuring scoring calculations that had been hurting the score before the discharge – a plus for the score.

Dismissed bankruptcy. Following dismissal of the bankruptcy, where the debt continues to be owed, these amounts continue to be considered by the score to its detriment. Additionally, any of these debts not already assigned to a collection agency or the subject of legal action can be fair game for such consequences that can increase the debt and lower the score even further.

There could be a light at the end of this tunnel, however, and you may be closer to seeing it than you might think. Since most negative information is removed after seven years and it’s been eight years since the bankruptcy filing, much of the negative credit history leading up to it is likely to have already fallen off your credit reports by now. The bankruptcy-dismissed notice will appear for only a few more years, and because of its age has already lost some of its sting. If you’ve established some positive credit in recent years, your credit score could already be on the upswing.

Should you care about a bad address on your credit report?

This post originally appeared March 17, 2016 on CreditCards.com as “Wrong address in credit report won’t hurt score”

By Barry Paperno

Dear Speaking of Credit,
I was reviewing my current credit report. On it there are two previous addresses that are not mine. They’re a former business associate’s address. At no time did we seek joint credit as business partners. In fact, these addresses have dates that are after our business relationship had ended. To my knowledge no credit has been opened in my name as a result of this, but I would like to know if there is something I can do within the law to stop this from happening again, or better yet, to deal with the fact that this has happened without my knowledge or agreement. Thank you. – Dan

Dear Dan,
Your question brings to light an important part of your credit report – personally identifiable information – that’s often overlooked or not taken seriously, since it cannot impact your credit score. Yet, as you’ve found, such errors can still be worrisome.

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How bureaus decide which address is ‘current’ vs. ‘previous’?

This post originally appeared March 17, 2016 on CreditCards.com as “Wrong address in credit report won’t hurt score”

By Barry Paperno

Dear Speaking of Credit,
I was reviewing my current credit report. On it there are two previous addresses that are not mine. They’re a former business associate’s address. At no time did we seek joint credit as business partners. In fact, these addresses have dates that are after our business relationship had ended. To my knowledge no credit has been opened in my name as a result of this, but I would like to know if there is something I can do within the law to stop this from happening again, or better yet, to deal with the fact that this has happened without my knowledge or agreement. Thank you. – Dan

Dear Dan,
Your question brings to light an important part of your credit report – personally identifiable information – that’s often overlooked or not taken seriously, since it cannot impact your credit score. Yet, as you’ve found, such errors can still be worrisome.

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