Credit Help Services by Credit Clean
Credit Repair & Bad Debt
Mediating Bad Debts What is Mediating Debts? What a lot of people don't understand when they have a collection or a charged off account showing up on a credit report is that paying this account is not always going to resolve the negative affect the account has on your credit or credit scores. For instance ... let's pretend you have a collection account that shows unpaid for the amount of $150 on you credit file with one of the credit bureaus. Your first instinct may be to pay the account off. If this is your instinct are you paying the account off because you believe that the account will be removed from your credit report? If so, this is false. A collection account unpaid is showing as a "5 or 9" rating. On a scale of 1 to 10 with ten being the worst rating this is how that account is showing when it is unpaid. Now lets say you pay it. The rating (whenever the collection gets updated to even show paid) for the paid collection is a ("5 or 9") Did paying this account help your credit out? Did it make anything different? No ... because a paid collection is just as bad as an unpaid collection. Many of us feel we should pay a debt we owe just because we owe it which is very commendable, however, if you pay a debt you owe and you get nothing that fairly helps you from doing so "Why would you do it?". What's even worse is that paying a collection can restart the seven year clock and actually allow the debt to be reported for seven years after you pay it off. If the account has already been on your reports for five years it would have had to of come off in two years. Now you paid it now it may not come off for seven more years. No creditor or collection agency cares what your reasons are for a negative defaulted credit account. The only thing anyone trying to collection for a debt will care about is COLLECTING FOR THE DEBT. There are many reason beyond our control why our credit may become bad. Our system does not allow for anything other than bad credit so even if you were the best debt payer in the world and had a major problem beyond your control you look just as bad as the bum who doesn't care about credit or paying debts. Be very careful paying any creditors or collection agencies money in fact if you are going to get help with the clean up of your credit you should not pay anyone at all. Let your counselor give you advice before you make any moves. Mediation is what is done to try and get the amount of money owed to a creditor reduced AND to have the account deleted entirely from your credit reports. Not all creditors or collection agencies will remove paid debts so this process needs to be handled in a specific way. If mediation is something that needs to be done then let someone mediate for you who knows what they are doing. Mediation should be the last resort when cleaning up and restoring credit. The best result of a negative account is to get the account deleted, shown as unrated or showing as a good account. Return To Previous Page Page Last Updated
Sunday July 01, 2007 | 
