Cecily Zamora
Having a debt in collections can be stressful for anyone, and it's a priority for many people to get these accounts removed to make it easier to secure credit in the future. While paying off collections may not improve your credit score, there are still a few ways doing so can benefit you. One way to get collection accounts removed is to dispute any errors in the listing by providing evidence. Another way is to negotiate with a collection agency to have negative information removed in exchange for payment. Lexington Law Firm could help you address questionable negative items listed on your credit reports, especially if you’ve had a debt unfairly or inaccurately sent to collections. However, some reviews of the company have been negative, with some reviewers claiming that Lexington Law barely did anything and kept them in the dark about the process.
| Characteristics | Values |
|---|---|
| Can Lexington Law remove collections? | Yes, but it may take a few months and the process is not quick. |
| How does Lexington Law remove collections? | By sending out letters, including validation letters, dispute letters, and pay-for-delete letters. |
| How much does Lexington Law charge? | They charge monthly, and bill based on time, not results. |
| Is it worth using Lexington Law? | Some people have had success with them, but others say it is better to write the letters yourself. |
| Are there any risks associated with using Lexington Law? | Yes, there is a class-action lawsuit against them, and they have been sued several times, including by collections agencies. |
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What You'll Learn
Communicating with collection agencies
Know Your Rights:
The Fair Debt Collection Practices Act outlines your rights when dealing with collection agencies. Debt collectors cannot harass, oppress, or abuse you. You have the right to ask them to contact you at a convenient time and place, and they must respect your wishes. You are protected against repetitious, excessive, and threatening communications.
Understand Your Debt:
Before communicating with collection agencies, gather all the information you have about the debt in question. Determine if the debt is legitimate and if you actually owe it. Understand the amount you owe and to whom. Collection agencies are required to provide you with this information during their initial communication or within a few days. If they fail to do so, it could be a scam, and you should never give out sensitive financial information until you have confirmed their legitimacy.
Respond Promptly:
When a collection agency contacts you, it's important to respond promptly. You can use sample letters provided by the Consumer Financial Protection Bureau to structure your response. You can request more information about the debt, dispute the debt if you believe it is not yours, or specify how you would like to be contacted. It's important to keep copies of any letters or communications you send.
Negotiate and Settle:
Collection agencies ultimately want to be paid. They may be willing to negotiate and accept a lower sum or set up a payment plan. If you can pay the debt in full, you can request a goodwill deletion, asking for the negative item to be removed from your credit report. Make sure to get any agreements in writing before making payments.
Seek Professional Help:
If you feel overwhelmed or unsure about how to handle collection agencies, consider seeking professional help. While some people choose to handle debt collection matters themselves, others prefer to work with professionals who can increase the chances of a successful outcome.
Remember, communicating with collection agencies can be a complex process, but knowing your rights, understanding your debt, and responding promptly can help you navigate it effectively.
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Goodwill deletion requests
A goodwill letter is a request to creditors to remove negative remarks from your credit reports. As the name "goodwill" suggests, this request puts it on the creditor to make a good-faith effort to cooperate and work with a client or customer, and to establish a good business reputation with its clients. Goodwill letters are most likely to work for one-off occurrences. If your goodwill letter is successful and a creditor agrees to remove a negative remark from your credit report, it's important to take precautions to avoid incurring negative items in the future. Organising your finances, paying bills automatically, updating your contact information, and building an emergency fund can help you improve your credit.
Creditors are never obligated to remove accurate negative items simply because you ask. In some cases, creditors may not be able to remove the items due to internal policies or agreements with credit bureaus. It's best to send a goodwill letter when you have a logical reason for missing a payment. Goodwill letters are most likely to work for smaller negative items, such as late or missed payments. If you have a good history with the individual creditor and have demonstrated effort to handle credit and finances more responsibly, a creditor might be willing to remove negative remarks.
A pay-for-delete letter is another way to negotiate with a collection agency to have negative information removed from your credit report in exchange for payment. Collection agencies are in the business of collecting debt and are more likely to consider offering a pay-for-delete letter when you're willing to pay more than they paid for the debt. Before making a pay-for-delete offer, it's important to send a debt validation letter within 30 days of initial contact with the debt collector and receive verification of the debt. If your pay-for-delete letter is approved, you'll usually have a short window to make the payment.
Lexington Law has been the subject of several lawsuits, including some filed by collection agencies. Some people have reported positive experiences with the firm, citing its transparency and good communication. However, others have expressed disappointment, stating that Lexington Law barely did anything to help and used generic dispute letters that were ineffective in removing late payments. Some have also mentioned that the firm is expensive and may drag out the process to charge more.
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Credit repair letters
Collection accounts can have a negative impact on your credit score, even if they are paid off. As such, it is a priority for many to get these accounts removed from their credit report.
Lexington Law can assist with this process. However, it is important to note that they are not the only option, and some have criticised their services. It is possible to write the letters yourself, and there are free templates available online. Some people have also criticised Lexington Law for sending out intentionally unprofessional letters, keeping clients in the dark about the process, and billing based on time rather than results. There are also several lawsuits against Lexington Law, including allegations of fraud, racketeering, and tortuous interference.
However, some people have had positive experiences with Lexington Law, praising their transparency and communication. They can help with the back-and-forth process of sending disputes and waiting for responses, which can be time-consuming for those with busy lives.
If you choose to write the letters yourself, there are several types of credit repair letters that can be used:
- Validation letters: These are sent directly to the collections agency via certified mail. If they do not answer within 30 days, you can notify the reporting agencies.
- Dispute letters: If the validation letter is unsuccessful, you can send a dispute letter to the reporting agencies via mail. The collection agency will then have 30 days to respond.
- Pay for delete letters: This is a way to negotiate with a collection agency to have negative information removed from your credit report in exchange for payment. It is important to get any agreement in writing before making a payment.
- Goodwill deletion letters: You can request a goodwill deletion from a collection agency or the original lender if you have already paid the account in full. In your letter, explain that the debt has been paid and that you have improved your credit usage.
It is also important to note that, according to the Fair Credit Reporting Act, you have the right to dispute mistakes on your credit report by providing evidence. This can be done by gathering evidence, sending a certified letter, and waiting for the credit bureau to conduct an investigation.
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Lawsuits against Lexington Law
Lexington Law has faced several lawsuits over the years. One of the most prominent legal actions against the company was initiated by the Consumer Financial Protection Bureau (CFPB). The CFPB alleged that Lexington Law and its partner companies, including CreditRepair.com, engaged in unfair practices, such as illegally charging upfront fees and deceptive advertising in violation of the Consumer Financial Protection Act of 2010 and the Telemarketing Sales Rule. As a result of the CFPB's enforcement action, Lexington Law and CreditRepair.com were ordered to pay $2.7 billion in consumer redress and civil penalties. They were also banned from telemarketing credit repair services for 10 years.
In addition to the CFPB lawsuit, Lexington Law has faced other legal troubles, including a class-action lawsuit. There have also been allegations of fraud, racketeering, and tortious interference. Some former clients have expressed dissatisfaction with their services, claiming that they barely did anything and that the same results could be achieved without their assistance. There are also allegations that they write and sign letters that the debtor is unaware of, and that they use mass-mailing companies to inundate companies with letters.
Lexington Law has also been sued by collection agencies, although the specifics of these cases are not mentioned. However, one source mentions that there are two cases currently making their way through the federal court system, which include the aforementioned allegations of fraud, racketeering, and tortious interference.
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Improving credit score
Improving one's credit score is a common financial goal. A good credit score can make it easier to get a loan, rent an apartment, or lower your insurance rate. While there is no secret formula for building a strong credit score, there are several guidelines and strategies that can help. Here are some ways to improve your credit score:
Understand Your Credit Score and Report
It is important to understand the factors that influence your credit score, such as payment history, amounts owed, length of credit history, credit mix, and new credit. Checking your credit report can help you identify specific factors affecting your score. You can obtain your credit report from major credit reporting agencies like Equifax, Experian, or TransUnion.
Make Timely Payments
Your payment history is a significant factor in determining your credit score. Always make payments on time to improve your creditworthiness. Set up automatic payments or electronic reminders to help stay on track. If you have missed payments, get current and stay current to demonstrate consistent repayment.
Manage Credit Card Balances
Keep your credit card balances low compared to your total credit limit. Experts recommend using no more than 30% of your total credit limit. Paying off your credit card balance in full each month can help you achieve the best scores and minimize interest costs.
Build Your Credit History
If you are new to credit, consider applying for a starter credit card or a credit-builder loan. These products are designed to help establish and build your credit history. Over time, your credit mix will improve as you apply for different types of credit to meet your financial needs.
Dispute Inaccuracies and Errors
Review your credit report for any inaccuracies or errors, especially regarding collection accounts. If you identify any errors, gather evidence and initiate the dispute process with the credit bureaus. You can send a certified letter and follow up to ensure the necessary corrections are made to your credit report.
Negotiate with Collection Agencies
Collection accounts, even if paid off, can negatively impact your credit score. Contact the collection agency and negotiate to have the negative information removed in exchange for payment. This process is often referred to as a ""pay for delete." It is important to get any agreement in writing before making the payment.
While improving your credit score takes time and consistency, implementing these strategies can help you rebuild your creditworthiness and achieve your financial goals. Remember that seeking professional advice from reputable sources can also assist in tailoring a plan specific to your circumstances.
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Frequently asked questions
A collection account is an account in your credit report that has been sent to collections due to unpaid debt. This can negatively affect your credit score and reduce your chances of securing credit in the future.
Collection accounts can be removed by negotiating with the collection agency or lender. One method is to use a "pay for delete" letter, where you request to have negative marks removed in exchange for partial or full payment. You can also request a \"goodwill deletion\" if you've already paid the account in full. If the collection account is inaccurate or contains errors, you can dispute the information by providing evidence to the credit bureau.
Lexington Law is a credit repair company that can assist in addressing negative items on your credit report, including collection accounts. They can guide you through the process of disputing inaccurate information and negotiating with collection agencies. However, some people have reported mixed experiences with the company, and there have been lawsuits against them. It is important to do your research and understand your rights when dealing with collection accounts and credit repair companies.
Yes, you can attempt to remove collection accounts yourself by sending dispute letters to the collection agencies and credit bureaus. This may take more time and effort, but it can be a cost-effective alternative to using a credit repair company. Improving your budgeting and making timely payments can also help improve your credit score over time.
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