Should I pay off this old debt?

Discuss the Visa & MasterCard payment networks as well as cards that operate through them.
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vipgs3
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Should I pay off this old debt?

Postby vipgs3 » Tue Apr 07, 2015 11:28 am

I'll get right to the point;

Received my first credit card 6 years ago from First Premier Bank with a limit of $250. I used it responsibly for about 3.5 years. Long story short I ended up being irresponsible with it, maxed it out, and closed the card 2.5 years ago. It went to collections and transferred to different departments and to this date has not been paid. I have 8 other cards in my name, all with somewhat respectable limits that are used and always paid on time. All my accounts are current and up to date with overall utilization around 30% with a total credit line around $20,000 excluding $26,000 in a car loan.

The main reason and question I have, it seems that because I have this as a derogatory blemish on my report, it's preventing me from receiving credit limit increases on certain cards, and I feel as tho holding back my score from achieving the 700 and up club. If I were to pay it off, would this help with my current situation?

I'm financially in a better position and able to take care of my debt, just wanted to make sure that paying it off will not only be morally correct, but help with my overall credit report and score.

Just wanted to mention I was finally able to qualify and receive my first Amex BCE and Discover it cards. Currently I'm in the neighborhood of 660 for EX and 656 for TU with my score slowly going up.


Thanks in advance guys!


whit
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Postby whit » Tue Apr 07, 2015 8:18 pm

From what I've heard there's not much difference; it'll still show on your credit report but show as paid versus unpaid.

You'll have to wait for it to fall off.

Unless you're looking to be in the financial realm of things like finra..or if it's a job that specifies a credit check (where in you can explain the situation and for the former hope it will be approved and the latter probably will understand)--it probably won't make much of a difference.

250 isn't much though, I know folks who've skipped out on bigger amounts and less than a month later boast about buying customized sneakers--granted they were probably 100-200 bucks if anything--but still.

Hopefully others have better insight

takeshi
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Postby takeshi » Wed Apr 08, 2015 9:08 am

See if you can negotiate a PFD. Simply paying it may not provide much benefit and could possibly make things worse. Make sure you carefully research before taking any action. I'd suggest using other sites that have a bit more of a focus on rebuilding as well.

amex007
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Postby amex007 » Wed Apr 08, 2015 9:52 am

I would pay the $250 to have it show as Paid on your credit report. That still does look better than having an Unpaid derog. Depending on when your last activity on the card was, it might take a long time for it to fall off as it is 7 yrs from that point i believe. The debt collector is probably willing to settle it for 50% like they all do.
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rockyrock
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Postby rockyrock » Thu Apr 09, 2015 11:10 am

I firmly believe all debts should be paid on principal. Unpaid debts are bad for everyone as banks just pass along the costs to all customers. It's just the right thing to do and what you agreed to do when you accepted the card.

With all that said, by paying it off you could keep it on your report longer. The most important part of the negotiation process with the collector is that they remove the entry from your report. Call them and negotiate a (reduced) payoff AND removal from your CR. Get it in writing in the form of a letter for your records in case you need to dispute it.

Keep in mind, unless it's an in-house collection agency they probably bought the debt from the issuer for 40%-50% of the original debt. Keep this in mind when negotiating with them.

Good luck.
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amex007
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Postby amex007 » Thu Apr 09, 2015 11:46 am

rockyrock wrote:With all that said, by paying it off you could keep it on your report longer. The most important part of the negotiation process with the collector is that they remove the entry from your report. Call them and negotiate a (reduced) payoff AND removal from your CR. Get it in writing in the form of a letter for your records in case you need to dispute it.


I dont think it stays on longer if you pay it off. I had a debt with Chase for 9k and it had been on my record for ~5 yrs. By the time I was able to pay off the debt to the debt collector (who bought the debt from Chase), the balance had already ballooned to 14k off the ridiculous interest that the collection agency had been charging me for since they bought the debt. I was able to settle for 6k I think and it showed up on my report as Paid. And then it fell off eventually after the 7 yr period.
But if you're still applying for cc's, the creditor is going to notice the Unpaid status. The chargeoff is on the report but the derog is shown as paid and that would still be taken into account. If you are going to settle, make sure you make copies of everything. I even made a photocopy of the cashiers check I mailed to them. The faster you pay it off, the faster you can start rebuilding your credit. I didnt want to wait another 2 yrs for it to fall off and wanted to qualify for a low card so that I could start rebuilding credit.
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vipgs3
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Postby vipgs3 » Sat Apr 11, 2015 6:59 pm

Thank you to everyone who chimed in, I will be taking care of the debt promptly and requesting a PFD prior to any funds being sent. The one question that I do have is; how would I be able to know who owns this debt as this has now gone from the original lender? I don't mind paying what's owed, I just want to ensure I'm sending the money to someone who I know actually I owe l, as opposed to a company that had the listing and passed it off to another.

flan
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Postby flan » Sat Apr 11, 2015 10:24 pm

amex007 wrote:I would pay the $250 to have it show as Paid on your credit report. That still does look better than having an Unpaid derog. Depending on when your last activity on the card was, it might take a long time for it to fall off as it is 7 yrs from that point i believe. The debt collector is probably willing to settle it for 50% like they all do.


It's 7 years from the date of first default. some sleazy or incompetent debt collectors will attempt to re-age it so it looks more recent, but such practice is not legal.

OP: are they threatening to sue you? If not, I'd leave it alone.

vipgs3
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Postby vipgs3 » Sat Apr 11, 2015 11:36 pm

No I haven't had any contact in over 6 months. The debt is 3.5 years old.

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otter
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Postby otter » Sun Apr 12, 2015 8:09 am

rockyrock wrote:I firmly believe all debts should be paid on principal. Unpaid debts are bad for everyone as banks just pass along the costs to all customers. It's just the right thing to do and what you agreed to do when you accepted the card.


I do agree with paying off a debt because it's the right thing to do, but we're talking about First Premier Bank- they're going to pass along the costs anyway 'cause that's how they roll. If there's any creditor I wouldn't mind stiffing, it'd be them.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450



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