Question about debt settlement

[cashonlynow]

What is the name of your state?What is the name of your state? CA

I have some questions about debt settlement. Here’s a little background. In 2002 I went through some difficult times. Around October 2002 I started going delinquent on my credit cards and other accounts, which came to a total of about $9000.00. I started to get back on my feet and began to settle these debts around May of 2003. I settled what I believed to be all my debts except for a Capitol One card with a balance at that time of about $2900.00. They would not negotiate with me, so I used the money I had to pay the ones who would. I struggled with money for a while but I finally settled that last debt June of 2004 for about $1600.00 which was the original balance on the card (it had climbed to $3800.00 over this time!)

In February of this year I pulled all 3 of my credit reports (for the first time EVER) so I could begin to get my credit back on track. To my horror, there was still an outstanding balance of about $1500 on a different Capitol One account. I thought it was a mistake at first, but after researching my records I saw that this was a card I had forgotten about. (It turns out I had THREE Capitol One cards, one Providian, and one Household Bank.) When I looked through my old bills I realized why it was forgotten. After going delinquent in Oct. 2002, the ONLY correspondence they sent was something from Eskanos & Adler, in August of 2003! I ignored it thinking that it must be something for a debt I already settled and that the paperwork hadn’t caught up to the collection agency. I’ve not received any letters since or phone calls from them EVER.

Well, coincidently, since pulling my credit reports this year, I started receiving messages from a place called Northland Group. After doing some research here on this forum, I see that they are affiliated with a company called Sherman Acquisitions. I also saw that Eskanos & Adler are affiliated with Sherman Acquisitions, so I KNOW they’re calling about this Capitol One account. Following the advice I’ve read here, I’m NOT dealing with them on the phone, BUT, I have yet to see anything in writing from Northland Group. I want to try to settle this and move on with building my credit…for the first time in a long time. How should I go about this? Do I wait for some correspondence from them? Do I write them? (I found their address online.)

[Debt Guy]

The California statue of limitations is 4 years. If you defaulted in October 2002, then you still have about 18 months to run before the SOL will expire.

If you just sit quietly, you might be able to go another 18 months.

If you are determined to attack this, then you could dispute the debt directly to Northland. There is no rule that says they must call you first.

[cashonlynow]

Yes, the thought crossed my mind at this point to just lay low for a while and let the SOL run, but I’m afraid of being sued (not that I have any assets) after MORE interest is added and NEVER being given the chance to negotiate. I addition, I’ll be finished with school in about a year and pursuing a new career. I know that many companies now run credit checks on prospective employees. Who is going to want to hire someone running from collection agencies??? Plus the problem of trying to rent my own apartment and so on.

I guess my question is, does anyone know if I’ll be in a better position to negotiate if I go to them first? Are they even ALLOWED to call me without having sent something in the mail?

[Debt Guy]

Q. I know that many companies now run credit checks on prospective employees. Who is going to want to hire someone running from collection agencies??? Plus the problem of trying to rent my own apartment and so on.

A. These are legitimate concerns. But, just keep in mind that your credit is not so hot right now. Even if you paid off the debt in full today, your credit is still lousy. Only time will cure the problem. As a rule of thumb it will take about two years for your credit score to recover. The old debt will be on your credit report for 7 1/2 years after the default -- so this will drop off your report sometime in 2010.

Q. I guess my question is, does anyone know if I’ll be in a better position to negotiate if I go to them first?

A. I don't know if there is a right or wrong answer to this question. Personally, I don't think it makes a lot of difference. They are going to want 110% of what you owe and you are not going to want to pay that much.

Q. Are they even ALLOWED to call me without having sent something in the mail?

A. Yes. But, under the FDCPA, they must with 5 days following the phone call send you what is referred to as the initial communication letter.

[cashonlynow]

Thank you for answering my questions Debt Guy, I appreciate your time.

After giving it some thought, I’ve decided that I’m going to wait a month or so to see if I receive any correspondence from Northland. If I don’t receive anything, I will pull my credit report again and contact whoever is listed on the credit report as the collection agency. When I pulled my credit report in January, Capitol One was the only one listed on this account, not a collection agency. (I assume the account is getting shuffled back and forth) And actually, if I want to contact Northland at this point, I don’t even have a reference number to identify my account. They gave me no reference number when they left the messages.

One more question…Will it affect my score if I pull my credit report again so soon? There is another issue unrelated to this that I need to make sure is taken care of as well.

[Debt Guy]

Q. After giving it some thought, I’ve decided that I’m going to wait a month or so to see if I receive any correspondence from Northland. If I don’t receive anything, I will pull my credit report again and contact whoever is listed on the credit report as the collection agency. When I pulled my credit report in January, Capitol One was the only one listed on this account, not a collection agency. (I assume the account is getting shuffled back and forth) And actually, if I want to contact Northland at this point, I don’t even have a reference number to identify my account. They gave me no reference number when they left the messages.

A. They can pull up your account by your social.

Q. One more question…Will it affect my score if I pull my credit report again so soon? There is another issue unrelated to this that I need to make sure is taken care of as well.

A. Yes. Every pull affects your score. Here is my essay on credit scores:

While we don't know exactly how a credit score is determined, FICO considers the following factors (the approximate weight it assigns to each factor is in parentheses):
· Payment history (35%). Your score is negatively affected if you have paid bills late, had an account sent to collection, or declared bankruptcy. The more recent the problem, the lower your score -- a 30-day late payment today hurts more than a bankruptcy five years ago.
· Outstanding debt (30%). If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score. A low balance on two cards is better than a high balance on one.
· Length of your credit history (15%). The longer your accounts have been open, the better.
· Recent inquiries on your report (10%). If you have recently applied for many new accounts, that may negatively affect your score. Promotional inquiries don't count.
· Types of credit in use (10%). Loans from finance companies generally lower your credit score. FICO says this is most important when there isn't a lot of other information upon which to base a score.