Collections Career Guide and Counseling

Question: How are the collections and purchases schedules related to the borrowing needs of the corporation? Explain how the collections and purchases schedules are related to the borrowing needs of the corporation.

Answer: It's all about cash flow. When the company pays for purchases, cash flows out. When the company collects, cash flows in. During times when there is not enough cash coming in to cover the purchase needs, the company will need to borrow to cover the difference. It depends on the collection schedule when, and for how long, to borrow for current operating needs.

Question: What is the best tactic to settle my account that was sent to collections? My credit card balance was sent to collections for being past due 3 months. But before I realized that it got sent to collections, I brought the account current. Right now my account is showing as being current, but now I have to deal with the collection agency to pay off the balance(The original creditor told me that I have to go through the collection agency.) It's been in collections for only a month now and they are offering 80% settlement. I think they can go lower. What is the best tactic to get the lowest settlement?

Answer: to start off, since your account is current they may not be willing to go lower then 80% but nonetheless best tactic is to start at about 50% offer for settlement, be ready to go up to about 65-70%. 80% is usually the starting point for collectors on settlements. depending on how much you have paid on the Principal and how much you have paid on interest is a big deciding factor for managers to agree on a lower settlement, it also depends on your situation. many times collectors must probe for why you are unable to make the entire balance and why you are needing a settlement. also keep in mind that settlements can stay on your credit for 7-10 years and anything over $600 being written off by the bank will have to be claimed on taxes with a 1099c from the government. hope this helps.

Question: What legal entitlement does a collections company have to a house? I am trying to buy a house via short sale. The first mortgage approved the offer, but the second is no longer held by a bank - its held by a collections company! The collections company is demanding tens of thousands of dollars. The house is a few weeks from being auctioned. If this house goes to auction does the collections company get nothing like in a standard second mortgage position, or can they place a lien on the house to protect their interest?

Answer: This is what happened. There was apparently a collection where the collection agency got a judgment against the owner, and that was placed as a lien against the property. A judge will only approve such a move for substantial amounts of money....and tens of thousands of dollards would qualify. The short sale cannot go through unless the collection agency is paid off. Thus, the entire point of putting a lien against the home.

Question: Who actually sends info to the credit bureaus: creditors or collections agencies? If an account went to a collections agency, who sends info to the credit bureaus: the collections agency or the original organization? Each has told me that the other does it. If the account is payed in full not long after the account was forwarded to collections, do they still report it? They have not reported it at the moment and it's been about a month. Also, is it better to pay the original org or the collections agency?

Answer: They both will. The original creditor will list the account as a charge-off with a 0 balance. The collection agency will list the account with the amount due. Usually the collection agency will send you out a letter asking you if the debt is yours. By default if you don't dispute it in 30 days they consider it valid and will post the account on your credit report. If you pay it within the 30 days there is a good chance that they will not report it, but again it is best to have this in writting before you send a payment. As to who you pay. If the account is charged-off and sold to the collection agency you legally can no longer deal with the original creditor and must deal with the collection agency. When you talk to the collection agency it is best to get them to delete the collection account with payment. However, be sure to have this in writting from them before you send any money.

Question: Can I be spent to collections for a medical bill if I am at least paying something towards the amount owed? We are being threatened to be sent to collections because we won't pay what they think we can afford. We have offered to pay fifty dollars a month, but they wont accept that. Can they really send us to collections even though we are paying something. Its not like we had a choice for the medical care we received.

Answer: Yes, you can be sent to collections. And you don't want to go there. Before you go hire an attorney, please contact the billing department of the health care provider and make an appointment IN PERSON. Negotiate a slightly higher monthly rate for paying off the bill. You may need to bring in income tax statements or other verification of your financial status, if you need to prove a point that you truly cannot pay the bills in full. Trust me, you do not want this to go to collections. Once it does it will be MUCH harder to negotiate a monthly payment. A collections company will likely demand the full amount immediately under threat of judgment. If a judgment is rendered against you, the hospital will then use their attorneys to collect from you at at whatever cost, including liens against any properties you own, and the garnishment of any open bank accounts. So I urge you to set up a meeting with the billing department of your health care provider immediately to set up a more amenable monthly billing plan. This is a much cheaper alternative than going straight to an attorney, who will charge an hourly fee for his/her advice.

Question: How long after paying off collections will it take to improve my credit score? I wish someone would have told me when I was younger all the things that would affect my credit score, and how important that is!!! So here's my story...I moved out of an apartment before my lease expired, and I was charged aproximately $5k, which was rent for the remainder of my lease. I didn't pay it, so it went to collections and was reported to all 3 bureau's. In addition to that, I had about $2k more debt (medical) that also went to collections. I recently took out an auto loan (against a truck I already own) to pay off this debt, plus some other expenses that came up without warning. So, how long will it take for my credit score to improve now that my debts are settled? I have 3 credit cards that are paid on time (in full) every month, and my auto loan will be paid on time every month. The only other credit history I have is an auto loan that is paid in full (all payments were made on time). Currently my credit score is 545, I would like to see it in the 600's ASAP!

Answer: It normally can take about 6 months for your credit score to start improving, many credit reporting agencies take at least 30-90 days to get it reporting on your report as paid, also you want to make sure you get proof of the debt being paid after you paid it and you also want to make sure they report it to experian, transunion and equifax as a paid collection. Honestly collections can stay on your report for 7 years, however if they are paid it will increase your score in time. You can also pull a credit report for free once a year from all three agencies to keep tabs on your credit report and to make sure it's all showing paid and it won't ding your credit because YOU are who is pulling it.

Question: Can collections seize a bank account from unpaid medical bills? I have some medical bills that are unpaid and have went to collections (about $3000), I do not have a job at the moment but I do have a savings and checking account with a few hundred dollars in them. Can their collections seize my bank accounts?

Answer: Only if they get a court judgment.

Question: How do I protect our company from collections risks if Chrysler goes on Chapter 11? Rumor - Chrysler might file for Chapter 11 next week. I am in charge of credit and collection for our company. We have a lot of customers who are direct suppliers for Chrysler. What would you do as Collections Manager to protect your company from Chrysler's risk?

Answer: Isn't it a bit late to be asking this question? I have been saying the "Big 3" esp GM and Chrysler were in all probability were going to end up that way since the first bailout in 2008. Your company should have had a risk manager on board a long time ago.

Question: What court order would a collections agency file and what if it's undeliverable? In the State of California, if someone owes money to a creditor and the debt has been passed on to a collections agency, at what point would the debt collector ask for a court order and what would that entail? What would happen if they were unable to deliver the court order? How might the court order be removed before actually having to appear?

Answer: Depending upon the type of debt, they have a certain time limit (varies by state) to file a court order for a judgment against you. Simply filing the paperwork with supporting documents stating that you owe the debt is usually enough. They have a limited number of attempts to contact you for delivery. It's either 3 or 5 attempts. If they can't deliver, it will be presumed by the court that you are avoiding the problem and that delivery and receipt is presumed completed. It won't be removed. The creditor will get a default judgment against you.

Question: Can internal collections refuse to make payment arrangements? I graduated from University of Phoenix last year.They say I owe them 3k - I disagree but just want to pay and be done. I have tried to make payment arrangements (with UOP internal collections) for $150 a month until paid off and have paid on time since I made the arrangements but now they are telling me that if I don't pay in full they will send me to an outside collection agency. Can they do this?

Answer: Yes, the amount you owe is past due and they do not have to accept payment arrangements. As a practical matter, most will because if they go to court and get a judgment the court will just garnish which amounts to a payment arrangement anyway. Good luck.

Question: Is it legal for a collections company to access my credit report? I got a letter from a collections company saying I needed to contact them or my current credit score, XXX, might be negatively affected. Is that legal? I understand that having a collections action filed against me will impact my credit score. But I thought that if a company looks up my credit score (like a credit card application), my credit can be negatively affected. So it seems like I might get hit twice here. . . since they quoted my credit score AND apparently have filed a collections claim.

Answer: When a collection agency is "shopping" for bad debts, they are allowed to access reports as a soft inquiry. When a collection agency purchases the bad debt, they can pull a hard inquiry. What stinks is that if they are really twisted, (if they own the debt) they will pull a hard inq. once a month (or more) Just to put the pressure on the debtor, or, more than likely, just for grins.

Question: How can I start my own business in collections? I would like some information on how I can start a business in collections. How do they work? I know it consists of buying debts for little money and after that you try to get the money from the debtor. Does anyone work in collections that can give me some info on how it work, and how I can get started? How do I get paid for a collection I receive? How do I approach business and offer my services?

Answer: contact small businesses and offer to collect their outstanding debts for 1/2 the profit so if someone owes a business 40 dollars the business gets 20 and you get 20

Question: How do I get my windows movie maker collections onto a different computer? I want to get my windows movie maker video to work on the computer on my school but the collections will not copy. Therefore, I cannot get the pictures or videos to play. How do I get my collections onto the other computer from my home computer. I need to use a flash drive.

Answer: First, create a new folder on your desktop, then open the movies you want to save, then when you click on them, look for the box that says save or move this file, click on that and save it in your new folder. Then when you load your flashdrive, simply drag it over from the desktop into the scan disc folder and presto you have it.

Question: How long does it take for credit to recover from collections? I checked my credit report, and was suprised to see that I have a $32.00 account in collections. The account was set up in August and I have yet to hear from any collection agency. I was shocked, as I paid this bill on the day of service and again a few months later. I never heard anything from them again, via paper bill or phone call after I paid, so I assumed the account was taken care of. Now its in collections, and my credit is down to "fair" and in the 600s'!! I'm trying to despute this whole thing and possibly pay the $32.00, once again to try at least get the account closed. If I can't prove that I paid and it stays on my record, how long will it take for my credit to go back up to above 700? I have good credit habits otherwise, and I have 11 accounts with a perfect payment history according to the report. I was planning on buying a house in about 5 years, and want to be able to get the rate I deserve with my otherwise perfect credit history. This account is for a doctors office visit, in which I paid cash for, but they have no record of my payment. My 11 accounts are student loans, many of which have less than $1,000. Spending more than my income is not the problem here! It's pure clerical error. I live on 50% of my take-home pay. The remaining goes toward student loans. I put myself through college, and that debt was necessary and an investment in my future.

Answer: After about 2 years the impact to your score starts to diminish.

Question: How do I remove collections through the Hippa process? My wife and I have many many medical collections that need to be dealt with. I see many references to the Hippa process but have not found a step by step guide including sample letters. Can someone help me?

Answer: Hippa is to do with confidentiality in the health care business, not debt collections.

Question: Can my old apartments legally hand over my debt to collections after failing to send me a bill? We broke the lease but before hand had worked out with the management what we would have to pay. They told us that after we received the bill (yes we gave them the new address) we could come in and start making payments. They said as long as we made payments they wouldn't send it to collections. Instead we got a letter in the mail from a collections company.

Answer: In times like this when you're mentioning about the breaking of a lease, always make sure that you get something in writing. Also, before you sign a contract, also make sure that you carefully read the fine print before you sign the lease. But in a case like this, when you have got nothing in writing, and it was just verbally, then they can say one thing, and then do something completely different.