After disputing any collection activity in your credit file (see “Collection Accounts”), some or all may be validated, and you will have to negotiate with collectors in order obtain a deletion, or at least a change to how these collection accounts are reported in your credit file. Regardless of how you decide to handle fully-validated collection accounts, ensure that all of your contacts, negotiations and payments are documented.

Before you write a letter or call a collector, you may still have some options if you prefer to avoid them altogether. First, review the Statue of Limitations for collection activity in your state, as you may not need to pay a collection debt at all. For instance in California, the statute of limitations is 4 years; at that point the agency that owns your collection account must cease all collection activity. However, if you contact the collection agency after the statute of limitations has passed, the collection period starts over, and they have the right to resume collection activity against you. Even with the state limitation, the debt will be reported to your credit file for the entire 7 years it can legally remain.

If the account has not been sold to a collection agency, but the original creditor has outsourced collection activity to a third-party agency, or if the collection account is relatively new, you may be able to negotiate with original creditor directly. They may agree to accept full payment to remove “charge-off” or seriously delinquent payment history from your credit file or to get a collection account deleted altogether. Though it is unlikely, it is worth a chance, especially considering the detrimental effects delinquent payment history of collection accounts reported to your credit file can have on your credit score.

If the original creditor accepts a full payment for a seriously delinquent or charge-off account, they must at least remove “charge-off” reporting in your credit file. You must also ensure that the full payment and current status is updated in your credit file. Also ensure that the collection agency associated with the debt does not have a listing reported to your credit file, especially after the account has been paid in full.

If the original creditor refuses to resolve your account with you and refers you to the collection agency that bought your account, you now must deal with the collection agency directly. Depending on your patience, you still have options to ensure the best possible outcome with regard to what will be reported to you credit file. However, if want to obtain new credit that in heavily dependent on your credit score (e.g.: qualifying for a mortgage) in the near future, there are fewer possibilities. Keep in mind any opportunity for improving your credit file may be unlikely, and is as much contingent upon how much time you have, as it is your negotiation skills and tenacity (see “Negotiating with Collection Agencies: Your Options with a Collector”).