We find that when consumers first call us they think that they can dispute every last thing on their credit reports. That’s because many so-called credit repair companies are nothing but “dispute mills” that challenge every last account. Not only is it not the legally correct way to approach collection accounts, but it could cause you even more problems than you already have.
We go through a process here at My Credit Group to make sure that we’re staying within the letter of the law while working our tails off to make sure we get our clients the most favorable results.
So how do we do it? How exactly do we determine how is the best way to deal with each individual’s collection accounts?
We go to our handy flowchart. (That’s not 100% true, we’ve been doing this so long that it’s imbedded in our brains.) But the least we could do is put one together so you have a better idea of what goes into the process.
Understanding the Chart
I suggest printing out the PDF version of the flowchart so you can actually follow along. Each section has a little footnote to make it easier.
Please keep in mind that everybody’s circumstances are different and this is not a sure fire method of disputing collection accounts – It’s purpose is to give you general guidelines you can follow.
Obviously the two most important questions to ask yourself about a collection account being listed on your credit reports are “Is it your debt?” [1] and if it is, “Is that account being listed accurately?” [2] The legal reasons[3] you can you can dispute an account are because it’s inaccurate, incomplete, biased or questionable. Not just because you don’t feel like paying them.
If you know that items aren’t yours or are being reported incorrectly then your first step is to send a dispute letter to the three major credit bureaus[4] – Equifax, Experian and TransUnion. They then have 30 days from the receipt of your letter to investigate your claims. Within that time they’ll send you a return letter stating that the account has been either deleted, updated, corrected, or verified.[5]
If it’s corrected or removed as expected, success … you’re done. However, sometimes the original creditor will claim that you do owe money and show the credit bureaus this “proof” of theirs. This doesn’t always mean that they’re in the right. If you know that the debt is inaccurate or simply not yours, the next step is to send the creditor what is known as a Validation of Debt letter[11] to have them show you their proof.
If they can show you proof then maybe you weren’t so honest with question #1. But if they can’t and still refuse to stop reporting that derogatory account to the credit bureaus, you may have to take them to court[13] citing your legal rights under the Fair Credit Reporting Act.
And What if the Debt is Yours?
Well then the first question you need to ask is “Is it still within my state’s Statue of Limitations?” [6] If you’re not sure, check out our list of state’s SOL.
You may not want to hear it but you’re probably going to have to pay off that debt. If it’s past your state’s SOL[7] then legally the creditor no longer has the legal power to take action against you,which gives you a lot of leverage. It can however, stay on your credit reports for 7 years. That’s why it’s often best to negotiate a Pay for Delete agreement[9] with them and settle that debt for 10% to 30% of the total debt owed. Make sure you get this in writing first because creditors will almost definitely “forget” about it once you’ve paid them.
If the debt is still within the state’s SOL[8] then you want to be a little more cautious with your approach to debt settlement. This is because they can still sue if you decide to play hardball with them. Again though, you can try to work in a Pay for Delete agreement[9] to make sure that they stop reporting the account once it’s been paid off.
If you’re unable to negotiate a Pay for Delete you still need to pay off that debt. Once it’s all paid off it will unfortunately remain on your credit report[10], but at least you’re not dealing with a court judgment or even wage garnishment. Both of which are much I assure you are much worse for your finances.
If you did get your creditor to agree on a Pay for Delete then you’ll likely need to send a dispute letter to the credit bureaus[4] to ensure that the account is removed from your reports. Ideally the creditor won’t even respond to the dispute and the negative account will be removed.
Blindly Disputing Every Account
I know this seems like a good idea, just sending off dispute letters for every derogatory account that you have in the hopes it falls off. But you can be making your situation much, much worse.
You’ll notice there’s no section of our flowchart for this option because it’s just a dreadful approach to correcting or removing collection accounts. If a debt is yours and you know it, disputing it will alert the creditor that you’re trying to get out of paying them. Expect them to come after you with everything they’ve got after that.
If they sue you, not only can they eventually go after your wages, but now you have a court judgment being listed in the public records section of your credit reports.
This is why we believe that dispute mills aren’t a sensible approach to removing or updating collection accounts.
Still confused or just have a question? Let us know and we’ll see what we can do to help.
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