Are you getting an avalanche of phone calls, or letters from Commonwealth Financial Systems? Have you discovered a collection account from them on your credit reports?
If so, you’re in the right place. Commonwealth Financial Systems is a large, aggressive, third-party debt collection agency.
They’re headquartered in Dickson City, Pennsylvania with over 25 years experience, servicing accounts nationwide. They’ll collect on many types of consumer debts including: financial, medical bill collections, retail, government, and more.
They’re also what’s called a junk debt buyer or late-stage debt collector. This means they may have purchased the rights to your alleged debt, from yet another collection agency.
The purpose of this article is to share how exactly to handle this alleged debt with Commonwealth Financial Systems. Along, with how to exercise your rights as a consumer, and protect your creditworthiness.
We need to begin with the Fair Debt Collection Practices Act (FDCPA). This federal legislation was passed by Congress with the intention of regulating the debt collection industry.
In short, it requires debt collectors to be upfront and honest. Along with giving you a modicum of respect and dignity. It says much more, and it’s worth reviewing in detail, at your convenience.
Does Paying Off Commonwealth Financial Collections Improve Credit?
Most folks first concern is will paying off collections improve credit? You’d think so, it makes sense that it would. But no.
If all you do is pay collections, and nothing more, the only thing that’ll happen is a change in the status of the collection item on your credit report. It’ll be changed to a paid collection.
This is still a negative item, that’ll lower your credit score. According to Anthony Sprauve, a spokesman for FICO, collections on your credit report can damage and drag your score down by as much as 100 points.
Listen, the key to get your credit score up is to remove this negative item from your credit report, entirely. And for some folks, after first performing the necessary due diligence in this article, they may discover it’s in their best interest to pay off collections, so they can get a clear credit report.
Commonwealth Financial Systems Collection Methods
Of course, you’ll start getting a flood of phone calls, and letters. In addition, Commonwealth Financial Systems is also going to report negative information on your credit reports about this account.
They’ll also frequently try and inflate the total balance on the account. They can legally charge you sky-high interest rates, and even collection fees. And these can be significant sums of money.
If they’re unable to collect payment, they have two options. First, they can turn around and resell your account to yet another debt collector. This new debt collector will start calling you, sending letters, and they’ll report more negative information on your credit reports.
Or alternatively, they can turn around and sue you. Yup, debt collectors and especially late-stage debt collectors will often file civil lawsuits against consumers. The goal is to win a judgement against you.
Because then you’re really up a creek. Depending on your state of residence, because every state has unique laws, a judgement can potentially result in wage garnishment, liens placed against you and or your property, and even asset seizure.
Not to mention a judgement on credit report files, will decimate your creditworthiness and overnight. Please, don’t just stick your head in the sand and pray and believe Commonwealth Financial Systems will just go away. It’s likely this problem will only snowball into a crisis.
Commonwealth Financial Systems, Inc.
245 Main Street
Dickson City, PA 18519
4 Tips To Handle Commonwealth Financial Systems
1. Request Debt Validation
Let’s now talk about the specifics of how to deal with debt collectors, and the very first step is to request debt validation on your alleged account. This is your consumer right, granted by the FDCPA.
We’re saying to Commonwealth Financial Systems you first prove this is a legit debt, show me the evidence, and then we may be able to discuss payment. It’s most effective to make this request in writing and send it using certified mail with return receipt requested.
That way you’ll have evidence of your request, and they received it. You see, they’re required to respond by providing you with the paperwork, documents, and evidence that does, in fact, prove this alleged debt is yours. This paperwork should show you all the detailed information such as: who the original creditor was, dates of account activity, balance, etc.
If they fail to validate your debt, then in accordance with the FDCPA, you’re no longer legally responsible for payment. Further, they’re supposed to contact all three of the credit bureaus to have them start getting collections removed from credit report files, concerning this account.
2. Statute of Limitations
If they do validate your debt, you’ll receive the aforementioned paperwork. We need to review this in detail, because we’re looking for your last date of account activity.
You see, the statute of limitations is a state law and it says precisely how long you’re legally responsible for repayment of a debt. And it ain’t forever. It does vary, so for full details, check out your local legislation.
Generally, it’s about seven years from the last date of delinquency. Once this legal time window runs out and expires, so does your legal obligation to repay.
The statute of limitations governs the vast majority of types of consumer debt including: medical collections, credit cards, retail, utilities, telecommunications, charge off accounts, and many more. The few exceptions are federal defaulted student loans, and federal income tax.
Beware. One of the dirty debt collection tactics is to re-age consumer accounts. With the obvious purpose of continuing to attempt to collect payment, despite a consumer’s legal obligation expiring.
3. Negotiate a Settlement
If your account is validated, and within the statute of limitations, we now need to share how to pay collections and so it will help your credit. This is going to require us to negotiate a settlement agreement directly with Commonwealth Financial Systems.
It’s best to get this agreement in writing, and there’s two parts. First, we should always negotiate to settle this debt for much less than the total balance due. Chances are your total balance has been inflated dramatically.
Often, you’ll be able to negotiate and settle for as little as 15% up to about 45% of the balance. Somewhere in this ballpark. For example, with a $1,000 debt, you may be able to pay just 25% or $250.
The second part of your agreement is mission critical. We need to get Commonwealth Financial to agree they’ll stop reporting our account information to all three credit bureaus, in exchange for our payment.
You may have heard you’re instead supposed to take a pay-for-delete approach when dealing with debt collectors. If you’re unfamiliar, this is where you demand Commonwealth Financial Systems first delete the negative item from your credit reports, and then you’ll make payment.
It sounds great. And you’re welcome to try it, till you’re blue in the face. It ain’t ever going to happen. Unfortunately. Debt collectors, don’t and won’t ever make this agreement for many obvious reasons to those of us that work in the industry.
It’s more likely we’ll see PETA opening up a butcher shop. However, they will agree to stop reporting your account information to all three credit bureaus, in exchange for your payment. And this is a much more effective and pragmatic approach.
4. How To Clean Up Credit Report
In this final step, we’re talking about how to dispute your credit report. This is how we’re going to get the Commonwealth Financial Systems collection item, removed and clean up your credit report.
To do this, we’re going to exercise more of your consumer rights, this time those granted by the Fair Credit Reporting Act (FCRA). This federal legislation enables us to challenge and dispute any item on our credit reports, so long as we believe it’s inaccurate, misleading, or made in error.
There’s three ways to file your credit report dispute online, over the phone, and by mail. Once the credit bureaus get your dispute, they first get to find it valid or frivolous. This is another conversation for another time and place, so make sure to sign up for our free newsletter for more credit restoration tips with Dan Willis, and join our congregation.
Once the credit bureaus get your dispute and find it valid, they’re required to investigate the item. They’ll call it a re-investigation. Nevertheless, they’ll contact Commonwealth Financial Systems and ask them to verify the account.
As per your settlement agreement with Commonwealth Financial, they won’t verify your account during the credit bureaus re-investigation. That’s the second part of your settlement agreement, that they’ll stop reporting your account information to the credit bureaus.
This means, in compliance with the FCRA, the credit bureaus must remove the Commonwealth Financial Systems collection item from your credit reports. Every single one of those marks on your credit reports must be verifiable. This is how to get rid of bad credit, and do so legally, by exercising your consumer rights.
Look, this isn’t an easy path. Nor is it consumer friendly. If only because the debt collection industry is much more akin to the Wild West. It’s often lawless with some outlaw companies doing very unethical and often illegal behavior.
Even with the best, most ethical collection agency you’ll have an adversarial relationship by default. They earn more profit, for every extra dollar they can squeeze out of you. Even if they’re smiling and being pleasant while doing so.
At the end of the day, your credit score is a lot like your Grade Point Average (GPA) in glory school days bygone. It doesn’t matter if you’re acing all your classes, if you’re failing underwater basket weaving, because this negative mark is going to ruin your overall GPA.
This is also true of your credit score. And why it’s of such paramount importance to clean up credit report dings, blemishes, and remove any negative items. Because this is how to better your credit score, by removing the items that are killing your creditworthiness.
We encourage our members to consider professional, legal, and legitimate credit restoration companies to help. Because in 2016 alone, over 9 million negative items were removed from consumer’s credit reports.
One of the best firms is the Credit Pros. They’ve helped their client’s successfully remove collections, late payments, charge offs, judgements, liens, and so many more negative credit report items.
Get a free credit consultation with a certified FICO professional by calling toll-free 1-877-418-7596. And for more tips, techniques, and strategies about how to improve credit with Dan Willis, sign up for our free newsletter and join our congregation.
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