Personal Finance

Punished for paying off old debts?

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  • Feb 17th, 2016 1:18 pm
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Member
Jul 22, 2015
291 posts
117 upvotes
Toronto, ON

Punished for paying off old debts?

I was settling a 2 year old debt from BMO that showed last date of activtiy Dec 2013. I made a settlement agreement on Dec 2015 and after checking my credit report it now shows $0 balance past due and in the comments sections it says "settlement made, account closed". I know I made a payment to the account but It was for a settlement, it now shows date of last activity of Dec 2015. This is my 3rd collection agency i'm settling debt with and the first 2 agencies never changed the last date of activity and only updated the past due amount, balance, and comments. Before anyone asks, I am settling debt because I'm trying to reestablish my credit and I feel like I have a moral obligation as it is my debt. Anyone have any idea what I can do to tell them to change it back to the original date? I already contacted Equifax and they said the information was provided by BMO and we updated as so. Now I have to wait another 6 years for the tradeline to fall off my credit report compared to the 4 years If i didn't touch the account and let it purge off.
16 replies
Banned
Jan 3, 2016
75 posts
11 upvotes
Ottawa, ON
Yes, sadly the system is set in such a way that moral behaviour actually works agains you. You pay it off, and it will haunt you for another 6 years; You don't pay it off and it can bounce back onto your credit report because collection agencies like to "massage" the last activity date.

The reality is quite simple: if you can't pay it off before it becomes statute barred, forget it and move on, committing absolutely that you will behave honourably moving forward. Perhaps, contribute that money to charity instead.

The alternative is to wait until AFTER it purges from your credit report. Approach your creditors after this and demand that they agree IN WRITING not to report it again to the credit bureau if you pay it in full.
Deal Addict
Jan 2, 2015
1633 posts
639 upvotes
Toronto, ON
I think it depends on the collection agency. I was in a similar position with a student loan, and they didn't screw me this way.

Collection agencies want their money, so the behaviour of that agency is illogical.
Deal Fanatic
User avatar
Apr 20, 2011
5310 posts
484 upvotes
Vancouver
If you didn't want it to be reported the way to do that is to not do anything as it will age.
Newbie
Aug 9, 2015
76 posts
39 upvotes
Parksville, BC
[quote="TorontoTacos" post_id="24769027" time="1452033287" user_id="1225951"] I feel like I have a moral obligation as it is my debt. QUOTE]

It's kinda amazing that people feel a MORAL obligation to pay back debt to corporations that by definition are AMORRAL. The rich don't feel a moral obligation to pay back debt. Just ask people who lost their retirement investments in NORTEL, ENRON, WORLDCOM, etc, etc. if they got money back because of morals. I'm not saying you shouldn't pay back your debts... You should... But not if it financially cripples you for decades...
"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning. " - Warren Buffett
Newbie
Mar 20, 2015
91 posts
32 upvotes
Toronto, ON
If you didn't pay it, they would keep changing the date anyways. That seems to be their new game. And even after it falls off, they will put it back on with a new date of last activity.

You paid it. Congrats. Your score will go up and creditors will extend to you again. Use the time to practice great credit habits (and score manipulation). When it drops off you'll be golden.

Did you ask them if they did it in error? Usually, they update Date paid, and leave date of last activity the same. It might be a mistake. Ask, you never know.
Deal Addict
Jul 22, 2014
2261 posts
764 upvotes
Ottawa, ON
The thing is, if you didn't pay your debt to the original creditor, you might as well forget it since they won't see the money anyway. And in op's situation, they just screwed themselves for another couple of years... Learn from your own mistake and tell the other collection agencies to f off.
Deal Addict
Jan 2, 2015
1633 posts
639 upvotes
Toronto, ON
TheClone13 wrote:
TorontoTacos wrote: I feel like I have a moral obligation as it is my debt.
It's kinda amazing that people feel a MORAL obligation to pay back debt to corporations that by definition are AMORRAL. The rich don't feel a moral obligation to pay back debt. Just ask people who lost their retirement investments in NORTEL, ENRON, WORLDCOM, etc, etc. if they got money back because of morals. I'm not saying you shouldn't pay back your debts... You should... But not if it financially cripples you for decades...
I'm not surprised that people feel they should pay off debt. Why shouldn't people pay off their debt? If you can afford it, pay it off.

I don't consider every lender to be amoral. Just some of them. I also don't think that "the rich" feel they don't need to pay off debt. Even if some are just doing it to protect their credit ratings, most still do it.

The examples of those three companies aren't good. Financially literate people don't invest in an undiversified manner. While Enron and Worldcom were corrupt, I didn't hear anything about them chasing their own investors to pay off loans.
Member
Jul 22, 2015
291 posts
117 upvotes
Toronto, ON
I'll never understand Equifax... I tried to resolve this over the phone with them and they said the DOLA was reported to them by the bank so it couldn't be changed. I then found an old credit report and sent that in with some other documents including the settlement letter from the collection agency and a few weeks later the DOLA is now back to 2013-12. Maybe it helped that on the settlement letter it said something like "payment of said funds is deemed no admission of guilt" or maybe they just like having documents and changed it without consulting BMO for clarification. Who knows but i'm happy that this is finally settled.
Newbie
Mar 20, 2015
91 posts
32 upvotes
Toronto, ON
I think it's because you settled.

I paid in full with biweekly installments. They made no updates to my account until after I made the final payment, when they updated it to paid and amount owing $0. Of course, BEFORE I started paying they had changed the date of last activity twice to prevent the from the account from falling off.
Newbie
Mar 20, 2015
91 posts
32 upvotes
Toronto, ON
Congrats! Equifax has been useless lately. I had to threaten creditors to get them to make changes.
Newbie
User avatar
Feb 18, 2010
44 posts
27 upvotes
Beaver Dam
Credit agencies are not legally allowed to change the DOLA UNLESS you make a payment, which then resets the DOLA, which is what you did. It will be on your credit report for 6 years from that new DOLA before it purges. Moral obligations aside, if you were past the statute of limitations (it varies province to province but for example in Ontario it's 2 years from the original DOLA), you were under no legal obligation to pay the balance and it would have fallen off your credit report 6 years from the original DOLA.

Now, not all credit agencies will exercise that power, especially if you in good faith paid them even though you weren't legally obliged to. It sounds like you lucked out with the first 2 and this third one is just being harsh. Your only real recourse of action would be to discuss it with the settling credit agency and essentially beg them to update it back to the original DOLA since you in good faith paid it. You can just explain that you're trying to clean up your credit ASAP and would like this to be off your report ASAP and cross your fingers.
Deal Addict
May 23, 2014
1273 posts
873 upvotes
canada
Let's say a collection agency updates the DOLA after 7 years. Can someone list some options and steps one could take?


Was just on the phone with equifax which again is India and the CSR was adamant that once the 6 years is up a collection agency can sell the debt to another agency and bam it will re appear.

CSR "until you pay it they will keep doing it".

So i ask theoretically " So a debt could re-emerge 15 years down the road or 1x every 8 years with nothing i could do about it?"

CSR :yes

CSR: you must pay it off
Deal Addict
May 23, 2014
1273 posts
873 upvotes
canada
TorontoTacos wrote: I'll never understand Equifax... I tried to resolve this over the phone with them and they said the DOLA was reported to them by the bank so it couldn't be changed. I then found an old credit report and sent that in with some other documents including the settlement letter from the collection agency and a few weeks later the DOLA is now back to 2013-12. Maybe it helped that on the settlement letter it said something like "payment of said funds is deemed no admission of guilt" or maybe they just like having documents and changed it without consulting BMO for clarification. Who knows but i'm happy that this is finally settled.
so does one need an OLD CREDIT REPORT WITH THE OLD DOLA to get the purged collection from 6 years ago to be removed again?
Deal Addict
Aug 31, 2014
1505 posts
564 upvotes
YVR, BC
best to always contact the original creditor and make payment to them via online bill payment, especially with credit cards etc.

collection agencies will make a settlement and since they already paid off the original creditor they do what they want and even sell the remainder owing to another creditor who tries to get the entire amount.

always when possible deal with the original creditor
Newbie
User avatar
Feb 18, 2010
44 posts
27 upvotes
Beaver Dam
You'd file a dispute with the bureau (either Equifax or Transunion) to have it removed. On the dispute form you fill out there is an "Other" category, that you can explain that the reporting collection agency has incorrectly reset the DOLA on an account that is both past the statute of limitations and has already been on and dropped off your report after 6 years etc and that there's been no account activity since the original DOLA. The credit bureau is mandated by law to "validate" what has been reported to them when they get a dispute. Now, what methods they use to actually "validate", I'm not sure. But even if the original DOLA isn't showing on your report, they would be able to go through your file and see the original tradesline. If that still doesn't get it removed (i.e. the collection agency just tells them 'it's accurate' when it's not, or they don't investigate it thoroughly), then the next step would be to escalate it to the consumer affairs branch in your province, whom regulate collection agencies. operating within the province.

Essentially, it's illegal that collection agencies report false information, including resetting DOLA when it isn't valid (i.e. you've not made ANY payments on the account), but that doesn't stop them from doing it as a tactic. I assume only the most shady ones do so. They get away with it most often because people don't take the time to correct it because it IS a pain to do so. Unfortunately the credit bureaus don't work for the consumer, they work for the creditors.

thesick wrote: so does one need an OLD CREDIT REPORT WITH THE OLD DOLA to get the purged collection from 6 years ago to be removed again?
Newbie
User avatar
Feb 18, 2010
44 posts
27 upvotes
Beaver Dam
What you were told by the CSR is completely incorrect.

Re-aging a debt that is past the statute of limitations AND the 6 year reporting period is illegal. Collection agencies are allowed to TRY and collect money from you forever i.e. they can call you and/or send you letters demanding payment all they like (as long as they also are within their legal bounds of how/when they do so), but they are NOT allowed to re-age an expired debt account unless certain criteria is met i.e. you make a payment on the account which then legally resets the DOLA.

If you have a tradesline that has been re-aged that doesn't meet the narrow criteria for doing so, I'd suggest 1-submitting a formal dispute through Equifax (they have a process/form online), and if it still doesn't get removed, then contact the Office of Consumer Affairs in your province. They regulate collection agencies and take complaints very seriously, up to and including major fines to agencies breaking rules.
thesick wrote: Let's say a collection agency updates the DOLA after 7 years. Can someone list some options and steps one could take?


Was just on the phone with equifax which again is India and the CSR was adamant that once the 6 years is up a collection agency can sell the debt to another agency and bam it will re appear.

CSR "until you pay it they will keep doing it".

So i ask theoretically " So a debt could re-emerge 15 years down the road or 1x every 8 years with nothing i could do about it?"

CSR :yes

CSR: you must pay it off

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