Making the Removal of Negative Credit Information from Your Credit Report Part of Your Negotiation with Debt Collectors

by Adam J Krohn on August 16, 2013

Negative information on your credit report can seriously affect you financially.  For example, it can make it difficult to obtain loans.  During negotiations with a collection agency over the payment of a debt, you should consider making the removal of negative credit information on your report part of the negotiations.  If you and the debt collector have come to an agreement on the payment of a debt, make sure that it has been agreed to that the debt will be marked as “paid in full” on your credit report.

False or Phantom Debts – What Are They

Debt collectors or others posing as debt collectors are not immune to performing their own scams.  Fraudulent debt collectors regularly attempt to collect on debts that never were or no longer are in existence.  These debts are called “phantom debts” and, while they cannot help your credit report, an over-zealous and fraudulent debt collector may attempt to corrupt your report by falsely reporting these debts.

The Fair Debt Collection Practices Act (FDCPA) helps to prevent against these phantom debts and these abuses by debt collectors.  These practices are invalid under the FDCPA and can actually lead to civil liability for a debt collector who fails to comply with the FDCPA by generating phantom debts.

Delinquent Debts – How they are reported on your credit report

When debts first appear on your credit report they are current and never late.  However, as you become behind on your payments, the debt will then be reported as 30, 60, 90, and 120 days late.

Once the debt reaches this point the creditor will likely charge the debt off.  “Charged off” and “sold to collections” are both possible statuses that indicate that the original creditor no longer has the debt.  These are also considered final statuses.  Once a debt collector has bought or has had your debt transferred to them, it will likely appear on your credit history twice even though the original account is no longer active.

A new collection account will be added to your credit history once a debt has been sold or transferred.  This new account will appear as active and will show that the debt collector has bought the debt from the original creditor.  If the debt is sold a second time to another collection agency, the first collections agency’s account will be changed to sold or transferred.  The status of the first collection account will still appear on your credit report even though it is not active.  All the accounts for the same debt will be deleted at the same time, seven years from the original delinquency.

Moving Towards Removal of the Negative Information

There is no requirement that creditors report any information to a credit reporting agency.  Therefore, when negotiating a debt settlement, be sure to ask the creditor to remove any negative information about the debt from your credit files.  If the collection agency tells you that they do not have the authority to remove the negative information, that only the original creditor has that authority, be sure to ask for the name and phone number of the person associated with the original creditor who does have the authority.

After you have the contact information contact the person and explain your situation, that you are taking steps towards repayment of your debts, cleaning up your credit score, and going to be responsible in the future.  Make sure to emphasize that having a clean credit report will help in the achievement of these goals.

“Satisfied in Full”

If you obtain an agreement with the collection agency to settle for less than you owe, make sure that the agency also agrees to report to the credit bureaus that the debt has been “satisfied in full”.  Make sure confirmation is given in writing from either the creditor or collection agency saying that it will acknowledge the debt as paid in full once the amount agreed to has been paid.

If there is an agreement with the creditor, or if the debt collector has the authority, to delete the original account line be sure that it will submit a Universal Data Form to all three major credit reporting agency deleting the account/trade line.  If the debt collector does not have the authority to act for the original creditor in deleting the account information for the original debt, it may be necessary to write separate letters to both the creditor and the debt collector.

We understand the frustration you may have when dealing with an aggressive debt collector. We have been successfully representing those abused and taken advantage of by debt collectors for years, and have a long list of successful stories to share with you. We offer a FREE CASE REVIEW for you to assess whether we can assist you with your matter. Please do not hesitate to contact us toll free at 1-800-875-3666 if you prefer to talk to a trained professional over the phone instead, or of course, visit our website at

Adam J Krohn
Adam J. Krohn is one of the founding partners of Krohn & Moss, Ltd. Consumer Law Center® He has been admitted to practice law in Illinois, Missouri.
Adam J Krohn
Adam J Krohn

Previous post:

Next post: