Credit Repair Opportunity in Your Mailbox

Collection Letters and Credit Repair

Collection Letters and Credit Repair

So you got a collection letter. It can be tempting to stick it in the drawer and forget about it, or even throw it in the trash without taking a peek. But to ignore that collection letter can cause you to miss several potential credit repair opportunities than just might protect your credit, save your money, and preserve your peace of mind.

A Strange Statistic

Collectors, by law, must send you a collection letter prior to reporting the account to the credit bureaus. A strange fact, but a huge percentage of active collections are for complete erroneous debts; debts that belong to another person, have already been paid by you or an insurance company, and debts beyond both the statute of limitation and the reporting period limit. You simply have to open that envelope.

Reading the Letter is a Must Do

If you do not recognize a collection the first line of credit repair defense is to send the collector a debt validation letter. Per the Fair Debt Collection Practices Act, a collector must prove the validity of a collection if you ask within 30 days of receiving your dunning letter. If they cannot do so they must stop their collection efforts and not report to the bureaus. Can you afford not to read the letter?

Do the Research

If you open the letter and recognize the debt there are still some great credit repair opportunities available. Right away you must investigate the statute of limitation for the debt. The statute of limitation is not the same as the seven year reporting limit, it is almost always far shorter. If the debt is beyond the statute of limitation it means that the collector has no legal leverage; if they sue you the case will be thrown out if you proffer the statute of limitation defense.

Go For the Gold

If you let a collector know that you are aware of the statute of limitation they should become very pliable. Now is the time to negotiate. There are a few credit repair tricks. Make your offer towards the end of a month. Collectors are like car salesman; generally they need to hit the numbers by month-end for the deal to be included in their paycheck. If they play hardball and do not want to deal just hang up. Try again later. They are of no threat, so go for the gold.

One More Try

If the debt is within the statute of limitation and you do not have the money to pay in full, you can still try to negotiate. The same end-of-month strategy applies, but if you cannot make a deal for a reduced balance, you can try for a payment plan. You must do this very carefully and make sure that you are comfortable with the terms and are able to make the payments, as your payment plan will create a new debt with a new reporting period and statute of limitation so be cautious.

Copyright 2010 James W. Kemish. All Content. All Rights Reserved.

Credit Repair Opportunity in Your Mailbox

By: Jim Kemish

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