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.


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.


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!

Strategy and Tactics

The tactics outlined below are abbreviated. This is simply because the credit industry is a mammoth, and it'd be impossible to include everything in a single, concise post. I highly recommend using the forums found at myfico.com. I'm not linking to it in order to indicate I don't get any kind of kickback for recommending their community.

Before digging in, a kind word of advice. You must have a lot of patience. The fact of the matter is, CAs aren't normally reprimanded for providing inaccurate info on your credit history. Sure, there are provisions that allow you to initiate complaints against CAs with your State Attorney General, the BBB or the CRBs, but that just means you will have a lot more work to do if it comes to that. By all means we should all file complaints when needed, as they do sometimes lead to financial judgements against them, like Midland Funding. While all those complaints are processed though, your credit still sucks and you can't get a new credit card / car loan / mortgage, etc. So patience is necessary.

Step 1: Assess the Damage

Once you get your report, you'll see all debts that are claimed yours. If your report is like most, the account numbers from CAs and other debtors aren't complete. They'll have X's replacing some numbers. This is no big deal for now. All of them should have a contact mailing address, as this is the address the credit reporting bureau (CRB) uses to contact them.

Divide all accounts into categories. Most of them will go into the first category: accounts you want verified. These include any open accounts (go to Step 3). Anything you know has been paid goes into a second category (go to Step 2).

While going through this process, don't pay a single cent to a CA. The aforementioned 7 year reporting period starts after your last payment. Therefore, if you have a debt from 6.5 years ago, and you make a payment today, you've just reset the clock. It's a process known as "re-aging," and it was specifically created to piss you off. Yay!

Step 2: Goodwill Letters

A "goodwill letter" (GW) is a non-confrontational letter. Let say, for example, you have a bill in collection from a medical procedure. You paid it off, but it somehow landed in a collection account anyway. Or, maybe you were going through a rough patch and have some 30 day late payment notices. On the other hand, maybe you paid off a collection account in the past, but it's still sitting on your report showing a $0 balance.

Whatever the case, in the GW briefly explain your situation clearly and honestly. Go ahead: pull on some heartstrings! But let's not get too crazy about it... I have had 2 collection accounts removed, and others have had more.

Step 3: Validate Debts

Send all CAs on your report "debt validation letters" (DV). If you get a notice of a new collection account, the CA is required to validate in the first 30 days after receipt of this notice. After 30 days, they don't have to validate, and may well ignore your letter. One caveat is Texas, where your debt must always be validated.

The first step is collecting a few certified mail forms from the USPS. The reason we get them first is so we can include the number from the form in the letter itself. That way, if we ever need to prove it was sent & received later, we have the number in the letter as well as the receipt.

Since you're validating debt, you don't want to provide more personal information than needed. Why not? Because the debt may not be valid, or the CA may not own the debt legally! Sometimes you'll get a letter back asking for more information to "verify your identity." You can get around this step if you want by having the letter notarized before sending it. For now though, here is a sample letter that I use:

Your Name
123 Main St
City, ST 00000

CA Name
123 Wall St
City, ST 00000

Account Number: 12345xxxxxxx
Last 4 digits of SSN: 1234
Debt Amount: $50
Certified Mail: 1234 5678 1234 5678 1234

This is a request to validate the above-mentioned debt under FDCPA 809(a). This should not be taken as an attempt to refuse payment on the alleged debt, but rather as an attempt to validate it. Along with validation of this debt, I request you also provide me the name and contact address for the original creditor.

Contacting me by phone is not convenient. However, I can be contacted by CA Name at the following mailing address:

123 Main St
City, ST 00000

Thank you,
Your Name

Your name is typed at the end, you do not sign it and you do not give any additional personal information. Send this out at the USPS using certified mail. It should be about $5 or less. After a few days, you can track the number off the USPS website. You'll see when it was delivered. Print out this receipt from the USPS website and save it in your records.

Now the 30 day period starts. The CA does not have to validate the debt, therefore, this "30 day period" is simply a reasonable time frame for response. However, they are not allowed to actively collect against you until they have validated. If they call you, get a record of the call from the phone company. It's possible you can sue them later if they make any attempt to collect against you before first validating this debt to you.

What is validation? It is a copy of the form you signed for the original debt, along with a notice from the OC to the CA that the CA is legally allowed to collect the debt from you. Anything short of this is not "validation." Sometimes you'll get an irritating note back stating how much you "owe" the CA. This is not validation, the CA knows it and they're just messing with you.

What happens next? If you get proper validation back, move to step 4. If you get improper validation, repeat this step again and send a copy of the response with it, explaining you really seriously want actual validation. If you get no response back, move to step 5.

Step 4. Pay for Delete (PFD)

At this point, the debt has been validated to you, and you can now be sure that the debt is real and the CA is not scamming you. In any context, though, continue referring to the debt as "alleged."

Now you can request a "Pay For Delete." This is a somewhat controversial process, according to CRBs. The credit bureaus want to have accurate information, and if you get something deleted, in their eyes your history is not accurate anymore. However, the only way to help your credit score is to have the CA deleted. Simply paying a collection debt will do nothing for your score. Also, the PFD process is completely legal.

The PFD letter is a request to pay the debt (or as low as 50% of the debt) and in exchange the CA will remove the collection account from your credit report. If the debt is outside the SOL, this is really the only incentive you have to pay the debt. Unless you need to pay off all collection accounts for some reason, you should only do so if you have the promise of having it removed. Otherwise, wait out the 7 year period.

The vast majority of collection accounts were bought from their original creditors for pennies on the dollar. A $1000 debt may have been purchased for $100. So if you were to offer $500 (i.e. 50% of the original) the CA will still make money off you. Since you only pay if they delete the negative mark on your record, therein lies the incentive for both parties.

Just send a very simple letter where you outline what amount you'd like to pay in exchange for deletion within 10 days of their deposit of your payment. The payment you send should be a cashier's check from your bank, or a money order. Don't send a personal check because it has your bank account number on it. Also, you should request that the acceptance letter from the CA be on company letterhead of some kind, and an authorized signature allowing the PFD.

If they accept your payment and don't delete, send out a "friendly" reminder. Then, if necessary, sue them in a Federal court for breach of contract. They will more than likely respond by deleting the CA record, and then you drop the suit.

Just to reiterate, you may well get no response from your PFD letter. If that happens, you can try sending it out again as many times as you want. However, if the debt is out of the SOL, do not pay a dime until you get a written agreement for deletion. In 7 years from the start date, it will be gone from your history anyway.

Like all parts of this process the PFD process is not assured to work. You might get ignored.

The likelihood that older accounts were removed because of the debt validation portion are pretty good, since many companies don't keep records for very long. I have read in some instances a CA can't validate because they don't have original records. Of course they don't tell you that, they just ignore your DV request.

So the PFD is for the really stubborn ones that will likely not go away for 7 years. It's basically the last step before opting to ignore. To be fair, it's a pretty good deal for both parties, in theory.

Step 5. Time to get serious

So you have at this point requested debt validation, and received no response from the CA. This happens very frequently. You can send another letter out to the CA, with the original letter attached, asking again for validation. If you do this, wait another 30 days to proceed.

Optionally you can skip the second letter. Next, send your documentation to any CRBs that have record of the invalid debt. You should write a brief letter to the CRB telling them the CA "cannot" validate the debt, and as a result the inaccuracy should be removed from your history. There is no need to get real wordy about it. Also, in the eyes of the FDCPA, there is no distinction between "can't" and "won't" validate, so don't worry about that.

Hopefully, the debt will be removed from your report. Realistically, if the CA can't validate the debt, they might sell it to some other agency and you'll have to do this again. If that happens, it may be beneficial at this point to find an attorney to assist in a lawsuit. You'll have ample documentation to prove a debt is invalid.

Step 6. Continued Vigilance

If you can afford it, pay for a monthly monitoring service. The current going rates are anywhere from $5 to $20, and sometimes your credit union or bank will offer something like this. What you want is some way to know who requests your credit history and for what reason.

Sticking your head in the sand regarding credit is not a great idea in the digital world, as identity theft is so much easier today than the past. Perhaps you can discontinue credit card usage or forego a mortgage, but you simply can't ignore what's reported to CRBs.

Some general maintenance:

1. Send letters to CRBs asking them to remove any addresses or names (e.g. a maiden name) you find that are not current. The CRBs are required by law to remove inaccurate information, and frankly their reputation depends on it.

2. Always send out goodwill letters to companies that report negative information in your credit report. Sometimes it won't work, sometimes it will. You may get someone on the other end having a great day, and they'll remove your bad record. Yes, the whole credit industry is somewhat capricious and many times it is pernicious. Just keep trying to get bad marks removed.

3. Follow the rules. I know the credit game sucks, but until it is fixed just toe the line. It's really quite impossible to know how our credit histories will be used in the future. I'd wager many ways they're currently used were unthinkable 20 years ago.

4. Start using a free VOIP service for any bills, credit, or loan accounts. I use Google Voice. I get a free phone number, and in Google Voice settings, I can pick what "real" phone to ring when I receive a call to this free number they provide. The benefits are enormous because I can block calls in Google Voice, and they will never reach my cell phone. I use it for other things too, like posts in Craigslist  ...

Originally posted to jamesia on Wed Mar 13, 2013 at 10:22 AM PDT.

Also republished by Income Inequality Kos and Community Spotlight.


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