paying off a discharged debt

[nrandell]

I filed Chapter 7 early this year and was discharged in May. On my credit report under collections I have one discharged account for $104. Would there be any improvement to my credit score by paying it off?

[frogger]

What you want to offer them is to do a "pay for remove". You pay, they remove it from your credit report. It's quick and easy to do. If you do decide to pay, get it in writing that they will remove. If you don't get anyone that seems to know how to do it, ask them who handles their E-Oscar. That's who you need.

[nrandell]

Called and said their policy is to not delete but to update it as being paid. I asked for the person who handles E-Oscar and they were like "Who?" haha. I know it's better to have it deleted but would my credit improve at all if it said "Paid"?

Thanks.

[LadyInTheRed]

I would not pay to change the reporting. The BK will be on your credit report for 10 years. One correctly reporting discharged account will have little or no additional negative effect on your score, especially after 2 years. If the account shows that it is currently in collections or was in collections at anytime after your BK filing date, you should dispute it so that they correctly report it as included in BK.

[TXskyblue]

No, paying it will not improve your credit.

[df04527]

Agree...paying it won't help.

[justbroke]

If it was included in bankruptcy (IIB), then it should read $0 balance and IIB. It should not even be reporting a balance.

[IBroke]

Called and said their policy is to not delete but to update it as being paid. I asked for the person who handles E-Oscar and they were like "Who?" haha. I know it's better to have it deleted but would my credit improve at all if it said "Paid"?

No. That would be a waste of money.

Let me add that many collection agencies simply delete accounts that were IIB because once they realize you filed (and got a discharge), chances are slim to none that they will get a penny from you - and after all, putting you under pressure to pay is the main purpose why they reported in the first place.

My mother had 3 or 4 collections on her file when she filed. Shortly after, all were gone.

[scotthay]

I must have had like a dozen collections accounts when I filed and about a month after filing like magic every one of them were removed. Raised my FICO a bunch of points.

[bcohen]

I would like to concur with everyone else here. After the discharge has been granted, any collection accounts MUST show as $0 balance, and "account discharged in Chapter 7 bankruptcy". The collection agency CANNOT legally list any dollar amount as owing. They can, of course, continue to list the amount under the "original balance" or "high balance" field, provided that the current amount due is $0. Paying the collection agency (who likely purchased the debt for pennies on the dollar) will not improve your credit scores, even if you can somehow convince them to delete the account completely from your credit reports.

Also, it should be noted that you can probably dispute the account as "incorrect balance" or some other reason code which attacks the accuracy of what is reported, and the collection agency will likely delete it from your credit reports. I did this, and got all but one of my collections accounts (which was for less than $120) deleted. I never paid a penny toward any of my discharged debts, and I never will.

[AngelinaCat]

I would have liked to pay off one of my medical providers once discharged, but this group decided to petition the court to have THEIR debt prioritized above that of the IRS! They failed in their attempt, of course. But that attempt, plus several dunning attempts afterward, sealed my determination to ignore this debt.

Had this medical group adhered to the BK laws in the first place, and not tried to "game" them, they likely would have gotten paid.... at least something. As it was, they ended up with 100 % of NOTHING.

[turtle19]

I was told by multiple people that Federal law actually prevents creditors from updating files if an account is voluntarily paid off after discharge So, let's say you had a car loan with about $500 left to go when you filed. You didn't reaffirm or anything and the loan was discharged. But, after the discharge, in order to simply keep your car, you paid the balance due or continued making the remaining payments. The creditor is not allowed to report those payments to your credit file nor even that the loan was voluntarily paid off. It will always say it was IIB until it falls off your report.

One lender told me that in those situations, you may be able to get a letter from the company stating that you continued to make payments as a "letter of reference" as part of a future application, but that's about it. Or...maybe convince them to completely remove it from your CR... but that's not very easy. Either way, it won't be reported as a positive on your CR.