Should I pay collections accounts in full just to stop them from hurting my credit score?
I am going through a divorce and have recently discovered accounts on my credit report that I was unaware of. I am now 30 years old and have zero prior credit history, save for this new minor mess. I confirmed that my identity has not been stolen.
I have pondered whether to dispute the accounts or just pay them in full to be done with them, and then put a freeze on my credit. Is it wise to pay my debt in full just to repair my credit? I don't have the time or patience to deal with debt collectors but mainly, I do not want to risk my career by having outstanding debts. I also don't want my payment of these accounts to be deemed as an acceptance of responsibility.
Alternatively, is there a legal way to have them removed completely, even if I have to pay in full? Whichever option produces the most favorable yet fastest results would be optimal. Our final divorce hearing could be before the end of the year and I would rather have this settled and not have to include it in the trial and prolong anything any further. I am financially able to pay in full immediately. I am just worried about how the accounts will be reflected afterwards and what impact it could have on my future credit.
I would put a "freeze" on the creation of any new credit accounts and get the advice of your divorce attorney immediately. You need to find out who created these accounts and when they were created. These accounts may have been created fraudulently and/or in violation of the divorce agreement.
It might not be your responsibility to pay the balances. And even if you have the funds, the responsible party should pay. Otherwise, what would prevent additional charges to these accounts?
As you are getting your legal advice, you should call the credit companies and tell them what has happened. If these accounts were created fraudulently, the credit companies may seek payment from the responsible party. Or, they might write off these as bad debts.
When the dust settles, you can contact the credit reporting agencies with the proper documentation to "fix" any damage to your credit rating that might have occurred.
Good luck resolving this issue.
You say you "discovered accounts on my credit report," so it doesn't sound like you are hearing from debt collectors. These may just be reported in error. You should not be payng debts you know nothing about. In any event, because you are involved in a divorce, your situation becomes more sensitive. In most states, as soon as a divorce is filed, both parties are under restraining orders to not deviate from daily financial practices. This includes paying debts off in lump sum.
Most importantly, you need to discuss this with your attorney and get legal advice on how to handle it. These debts may be marital and require consideration in the division of the marital estate. The funds you are contemplating using to pay them off with may be considered marital and need to be preserved in the marital estate for division.
I would hope that, again with your attorney's gudance, you can establish a minimum monthly payment that would be acceptable to the creditor as well as not violate your restraining order to maintain the financial status quo during the divorce. This should preserve your credit rating as best as possible.
An additional thought: These may be debts that your husband incurred in your name. This really needs to be fully understood with the assistance of your attorney and/or a financial forensic. I am a divorce financial consultant and financial forensic. Let me know if I can help you further.
I understand your challenges and divorce is never easy, take action immediately and swiftly to be in good standing with any debt collectors. I know you said you don't have the time or patience to deal with the debt collectors but I urge you to contact them all and be proactive. Set up a repayment plan and negotiate a deal to stop hurting your credit. Sometimes creditors will let you pay 60-70% of the debt and move on.