How to deal with Collection Accounts

Avoid the fear they invoke

Collections accounts, also called derogatory items, can be scary
A basic understanding of the process removes that fear
With most collections accounts, you have already paid the credit score penaltyWhen the account was charged off or became 30/60/90 days late by the original company
Each collection is a 20 point penalty, half of the penalty goes away after 1 year, all the penalty goes away after 2 yearsSee the graph below
The penalty for a collection is the same 20 points if it's $50, $500 or $5,000

Collection companies buy old debts from companies you had an account with that was closed with an outstanding balance
Collection companies buy these accounts for $.03 pennies on the dollarExample: $500 Debt they buy for $15 for the right to collect the $500 from you
As you can imagine even if the collection company gets $50 out of you, they make over 300% profit on their investmentIf you pay $100 then they make 660%, If you pay $500 they make 3,300%
The money you pay the collection company stays with the collection companyThe original company gets none of the payment as it already wrote off the account for a tax credit

DO NOT CLICK THE DISPUTE BUTTON

Any collection over 1 year old, DO NOT CLICK THE DISPUTE BUTTON!
The DISPUTE button is like poking a sleeping bear!Nothing good will happen
Ignore the collection company, do not speak with them, block their calls, do not respond to Email, SMS or US Mail
Collection companies are know to break the law and keep refreshing dates on collection accounts
This resets the clock and brings another 20 point penalty to you
What if the collection was paid or not your account? Contact Haseeb Law, they do not charge you a fee and they may even get you a payment for their breaking the law

If the collection is recent within the last 6 months you could regain the 20 points from the penalty
If the amount is less than $200, ask yourself if it is worth 20 points?
Ask yourself if the timing of the points will make a big difference if you are about to buy a home or carAs this would be a good reason to spend the $200
Having a collection on your credit report will NOT prevent you from buying a home or car!