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Written by Chuck Bowen
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Sunday, 01 June 2008 19:00 |
Hi Chuck,
I have a question about clearing up a credit report. I've ignored my credit for a long time after a major financial setback over 10 years ago. I figured I was never going to use credit cards again and therefore there were more important things to focus on. For the most part, it hasn't come to haunt me, except I'm no realizing I'm paying more for car insurance than I should as a result of my checkered past. But now, it's time to get serious about buying a house.
I've been given two different pieces of advice: 1) get my credit reports and call the creditors directly to work out any problems and 2) work with a credit repair company to do it for me. I'm worried that if I do this on my own I will end up with collectors all over me right away -- possibly even for old items that aren't even legitimate debts. I'm also concerned that there may be hidden costs behind these "free" credit reports. Is one way better than another?
The Ostrich Man, TX
Hi Mr. Ostrich,
Wow, 10 years is a long time to keep your head under ground. I know you must be dying to lift your head up high ... and breath again!
The best thing to do is to go to www.AnnualCreditReport.com and pull your credit reports from the 3 bureaus (Experian, Equifax & TransUnion). They truly are free (this site was mandated by Congress a few years ago) and totally confidential; one report is available from each credit bureau once every 12 months. You'll see the lay of the land and can begin "waking up" the creditors one by one to settle your old debt.
If the credit card debt is older than 4 years, the legal statue to sue you has expired. However, collectors can (and will) pursue you until death (or afterward your estate) for payment. That is why they are often called "ghost collectors"; they can come out of nowhere at the worst time to haunt you!
The good news is that they will be very negotiable since the alternative is to get ... nothing! Remember, they aren't allowed by law to sue you at this point. Likely, these debts have been sold one or more times over the years and now owned by someone willing to take pennies on the dollar. Begin with offering them 15-20% of the original debt and stick to your guns.
You do have a legal and moral obligation to take care of these ghosts.
You can do this yourself and save hundreds of dollars having a company do it for you -- that cares much less about settling it as affordably as possible! You can settle much of the debt for the cost of the service itself.
Don't wake them up all at once. I recommend dealing with the bigger ones first, since you'll save the most $$ settling those debts first. Then, attack the next smallest one and so on.
The credit reports will confirm which are actually your debts. Contact the last credit listed (their contact info will be on the report) and find out if they still own the debt. If not, they'll give you the information for the creditor to whom they sold it. If you don't recognize a debt, dispute it with the credit bureau using the instructions included in the report. The bureau has 30 days to confirm it in writing or remove it.
Be encouraged to handle this now ... and get on with life!
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