Herein lies information I've gleaned from 3rd party sources as well as my own, direct experiences regarding credit reporting and collection agencies. It's strictly not meant to be legal advice, so if you find yourself in a legally compromising situation, talk to a lawyer! They'd love to hear from you.
First, some basic knowledge. Before starting, freeze your credit report by contacting the 3 main credit bureaus. "Freezing" just disallows new accounts from opening. If someone or some company you've never done business with checks your report after freezing, they'll be barred.
Also, check your state's statute of limitations (SOL) for being sued. If you have a collection account younger than your SOL, you can be sued for it, and you really don't want that to happen. In those cases, don't contact them, and if they contact you, "play nice." If they call you, don't talk on the phone! And when you discuss the debt over mail, it is alleged. Anything construed as admission of ownership will reset the SOL.
Lastly, accounts don't show up on your account after 7 years, so if any of your accounts are nearing that age, you can probably just ignore them (assuming they're also out of the SOL).
Golden Rules
Allow me to tell you about some general Golden Rules I've come to understand.
Don't
1. Don't talk to collection agencies on the phone, ever. Further, if you do find yourself talking to one on the phone, do not give them any personal information about yourself. There is always the chance the the collection agency (CA) is a scam, or the original creditor (OC) was a scam, and adding your personal information to it will add to its validity later.
2. Never ignore a debt, legal notice or collection agency. They won't go away, and outright ignoring them will be taken as refusal to pay. Lots of things could possibly happen, like filing public judgements in court that anyone can see for the foreseeable future (thank you, Internet) or your wages could be garnished. That sounds bad, and it means that the entire HR department & supervisors at your work will know about your debt. Suddenly you'll find yourself missing promotions. On the other hand, if you don't want collection agencies calling you, write them a letter telling them phone calls are inconvenient, and outlining where they can send you mail.
3. Don't stick your head in the sand. No one in America agreed to be part of the credit system, but we all are, and resistance is futile. Non-interaction with the credit system is itself defined as a negative interaction. As things become more digitized, we should all fully expect that our credit histories will be used in ways we haven't yet imagined until our legal system catches up.
Do
1. Find out what's lurking in your credit history. You can do it for free once a year. For paid services, I recommend using myFICO.com as they offer your real FICO score. Believe it or not, most other sites offer fake scores, a.k.a. "FAKO," which are basically some proprietary formula that is not recognized. Regardless of the report's origin, at least you should know what debts are claimed in your past, as well as whom to contact about them.
2. Assume the debts in your credit history aren't real. Unless you have knowledge a debt is real, assume it is not. In fact, in most cases it's probably best to assume it is not real. It is completely possible a collection account is on your report from a debt you actually produced, but the CA doesn't have the legal ability to collect on it. This should hopefully affect how you approach the debt, as well as affect how you talk or write about it.
3. Send letters and contacts to CAs or OCs, not credit reporting bureaus (CRB). Unless otherwise noted, you don't want to get a debt validated by a CRB. Lots of times, this "validation" is done electronically. It's error-prone, and once you get something verified by a CRB, it's really hard to get it removed later. You can dispute with a CRB after all other methods are exhausted, or if you need to file a complaint against a CA.
There are lots more Golden Rules, but I am trying to hone in on a few of the most important ones. If you follow the six above, you're off to a much better start than I was, years ago!
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