Knowing your rights can protect you from Collection Agencies (CAs), and save you from a lot of panics, anxiety, and sleepless nights! Here are some of the most common myths/misunderstandings that consumers fall prey to and CAs exploit these myths as tactics to harass debtors in attempts to collect the debt.
Myth 1: If I don’t pay the debt, I will go to jail.
THERE IS NO DEBTOR JAIL! This is one of the most common tactics that CAs and scammers use to get debtors to pay! The only way someone goes to jail stemming from their debt is if they defied a judge’s order. There is a big difference here. DO NOT fall into this trap and lose sleep over it!
Myth 2: If I pay off a collection, it will be removed from my credit report.
Paying off a collection DOES NOT remove the debt from your credit report unless it is PAY FOR DELETE. The only thing it will change is the status of the debt to something like “paid in full” or something similar, and the date of last activity (DOLA) will also change to the date you pay the debt.
Myth 3: If I pay off a collection, my score will increase.
Paying off a debt DOES NOT mean that your score will increase because the damage has already been done by the negative item showing on your credit report. The ONLY way to increase your credit score is if the negative account gets removed from your credit report. This can be done either by disputing the debt to get it removed or using PAY FOR DELETE. The DOLA would be updated, but your score would not increase.
Myth 4: Talking to a collection agency resets the statute of limitation.
This is INCORRECT! However, what you say to them is very important. If you make a partial payment, verify the debt as yours, or infer that you can make a partial/full payment, that reset the SOL.
Myth 5: The Statute of Limitation (SOL) on a debt “travels” with the debtor and becomes active again.
“I recently moved to another state. the CA claims that the Statute of Limitation (SOL) “travels” with the debtor and tried to claim a debt I had in my old state that is already out of the SOL and is now active again based on my current state.”
This is FALSE and a common tactic used by CAs. The SOL stays with the state the debt was incurred in. If you incurred a debt in Oregon and then move to California, the SOL is based in Oregon and it does not travel/update no matter what state you are currently in.
Myth 6: My collection is already out of the statute of limitation, CAs are not allowed to collect the debt anymore!
Nothing prohibits the CAs to attempt to contact you to collect the debt. However, outside of the SOL, they are simply NOT allowed to sue. Refer to the FTC website for more information: https://consumer.ftc.gov/articles/debt-collection-faqs
Another tactic that we see most commonly used is creditors will renew your DOLA so that the debt will stay within the SOL. This is VERY common and we have seen this in so many credit reports! Make sure to pull your credit report and verify the information in the report. If the DOLA or any information in your credit report is incorrect, we highly recommend you dispute it from your credit report!
Know your rights and you can protect yourself from CAs harassment. If you need help with repairing your credit, and/or if you think the information in your report is incorrect, take advantage of our FREE consultation and book a spot in our calendar! We will help you go over your credit report, create a game plan, and give you information on how you can improve your credit. There are no expectations or commitments required 🙂 Book a spot on our website https://jennfinancialsolutions.com/credit-consultation/ or call us at (619) 514-4494!