When an account goes to collections there is a specified amount of time a collector has before they can no longer take legal action against you. This is called the Statute of Limitations (SOL). You can find the SOL in your state here.
What can happen if it’s not past the SOL though?
Collectors and creditors that are reporting debts inside the SOL on your credit report have the option to sue you at any given moment to recover the debt. When this happens they must serve you and take you to court. Most people fear the court summons and fail to respond within the allotted time. This gives the collector what is called a Default Judgment.
What happens next?
If you have allowed a debt to linger around and turn into a judgment you now have a Public Record on your credit profile. To give you an idea, bankruptcies and tax liens are also public records. This should tell you how serious a judgment is, but this is still the least of your worries. Once a judgment is obtained collectors now essentially have a judge’s endorsement to collect from you in any way possible. They can, depending on where you live, garnish your wages, seize your bank accounts, and/or place liens on your property.
I have the information, how does it affect me?
Imagine getting your paycheck one day that you are counting on to make rent, a car payment, or your electric bill and your check is short about 25%. What would that do to your household? Could you cover the bills? What if that was going to happen for months or years to come? When a collector takes the steps to get a wage garnishment they can garnish up to 25% of your income. If you make $24,000/year they will be able to take approximately $6,000/year, or $500/month until the judgment is satisfied.
What can I do?
You have a few options. The first option is to pay the debt off in full. Do you have the money sitting around to do that? The next option is to offer a settlement on the debt and pay a portion of the balance to satisfy the collector. While this will take the account to a zero balance, it does not change the fact that it was a collection account, nor does it remove the negative item from your credit report. What it does is update the date of last activity making it appear to be a new collection, and allows the collector to report it on your credit report for 7 years from the date you paid it off. The third option is to allow MSI to do an investigation and audit on your credit file. We use a series of Federal Laws for your benefit to remove inaccurate negative items. The process of validating the debt and the proof a collector must have to report it is almost identical to the proof they must have to sue you and get a judgment on the account. Without that proof obtaining a judgment is much more difficult provided you as a consumer challenge the collectors if they attempt to sue.
How does all of this benefit me?
By addressing the collection accounts prior to a suit, judgment or garnishment you are establishing that you are an informed consumer and will not be bullied around by collector’s dirty tricks. They are being held to standards that were put in place for your protection, but are so rarely enforced. MSI is on your side to help you raise your credit scores through positive building and coaching as well as the removal of negative inaccurate or improperly reported items. The two sided process helps you get out of the bad credit rut and allows you to purchase a home for your family, a car to get back and forth to work, and can save you thousands of dollars in a very short time.
Contact us today before it’s too late. Let’s address your credit for your protection. With good credit you have the leverage.
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For any questions or to schedule a free credit consultation, contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.