Have you gotten harassing phone calls from Portfolio Recovery Associates? Or did they send you a letter demanding payment?
Portfolio Recovery is a large collection agency based in Norfolk, Virginia. According to their website, they employ over 4,000 people and are a market leader in debt collections.
They were founded in 1996 and will collect on a contingency basis, along with purchasing debt portfolios. In other words, they may have purchased the rights to your collection debt, and for pennies on the dollar.
They serve and collect across a wide variety of types of consumer debt accounts including: banks, credit cards, retail, and what the industry calls junk debt accounts. In other words, it’s very likely Portfolio Recovery purchased the rights to your account, from another collection agency.
They are a late stage collection agency, and appear to be aggressively suing many consumers. Yes, suing you in a civil court. This is one of the frequent consequences when folks just ignore debt in collections, and regardless there is hope. We can fix this.
If you’re dealing with Portfolio Recovery Associates calling you, sending letters, suing you, or have just discovered them on your credit reports, you’re in the right place. First, if you’re not familiar with the Fair Debt Collection Practices Act (FDCPA) it’s worth checking out, at your convenience. Because this is federal legislation that’s supposed to regulate the debt collection industry.
Will Paying Off Collections Improve Credit?
Most people’s first question is will paying off collections improve credit? In short no. The only thing this does is change the status of the collection item on your credit report. It goes from unpaid to a paid collection.
Anthony Sprauve, a spokesman for FICO says collections on your credit report can damage your FICO score by up to 100 points. That’s huge! Moreover, FICO also says: “The fact that you have collections listed on your credit report will almost certainly lower your FICO score.” It’s pretty clear.
The secret to improve your credit score, is to remove this item, and any negative items from your credit reports. As if it never existed. And if you follow our suggestions below, for some folks paying off debt in collections can be an effective way to clean credit report dings, blemishes, and negative items.
Look, is Portfolio Recovery is unable to collect payment they can either sell your account to yet another collection agency. This new debt collector will begin calling you, sending letters, and they’ll report more negative information on your credit report.
The other option, and it really looks like Portfolio Recovery does this quite a bit, is they’ll file a civil lawsuit against you. Sue you for payment. If this happens you’ll be notified of your court date with a summons. It’s wise to appear in court, even if you don’t have the financial wherewithal to pay a nickel.
If they win their case, and more often when consumer’s don’t show up to defend themselves, they’ll be awarded a judgement, by default if no one appears. Getting a judgement against you, is very serious. Because it can lead to wage garnishment, liens placed against you and or your property, and potentially even asset seizure.
Every state has unique laws, so investigate your local legislation for full details. The worst part is if you get slapped with a judgement on credit report files, you’ll see your credit score obliterated. And virtually overnight.
On July 1st, 2017 new data requirements for the credit bureaus were implemented, making it easier the process of removing judgements from credit report files, and other public records, far easier than ever before. However, it’s much better to avoid this path, if possible.
Portfolio Recovery Associates LLC
120 Corporate Boulevard
Norfolk, VA 23502
Phone number: 1-888-772-7326
4 Tips to Dealing With Portfolio Recovery Associates
1. Look At The Dates On Your Account
There is a statute of limitations that governs consumer debts, this is a time window for which you are legally responsible for payment. Generally, this is about seven years from the first date of delinquency. However, each state has unique laws, so investigate your local legislation for full details.
This legal time window applies to the overwhelming majority of types of consumer debt accounts including charge off accounts, healthcare, utilities, credit cards, loan deficiencies, telecommunications, and many more. The few exceptions include federal defaulted student loans, and federal income taxes.
Beware, one snarky debt collection industry tactic is to re-age consumer accounts. This way they can continue to attempt to collect payment. This date of last account activity, frequently begins with the original lender or creditor, and one the statute of limitations expires, your legal obligation for payment has ended.
2. Ask For Validation Of Your Debt
When you request that your debt is validated. It is going to require that Portfolio Recovery proves they legally own your debt and can collect payment on it. Frequently collection agencies are unable or just unwilling to comply with this. If this happens, you don’t have to pay the debt, as in it’s legally forgiven.
And the credit bureaus should be notified to get collections removed from credit report files, concerning this account. It’s most effective to request validation in writing, and send it using certified mail, return receipt requested. This will give you evidence they received your validation request.
They’re required by the FDCPA to respond within 30 days of receipt. If your account is validated, you’ll receive the documents and paperwork that shows Portfolio Recovery Associates is the legal rights holder to your account. This paperwork will also show you who the original creditor was, your dates of account activity, the total balance, etc.
3. Negotiate A Settlement Payment
If your account is valid, and within the statute of limitations, the next step is to negotiate a settlement agreement with Portfolio Recovery Associates. There are two important keys with this step, first is to always negotiate to settle your debt for less.
How to pay collections 101, says we must settle for less than the total balance, and often in the ballpark of 15% to 45% of the balance. For example, with a $900 debt, we may be able to settle for 30% or $300. This is standard operating procedure.
The second key is in exchange for our payment, we must get Portfolio Recovery Associates to agree they’ll stop reporting our account information to all three credit bureaus. If we neglect this part, once we make payment, we’re going to get stuck with that paid collection item on our credit reports.
4. Remove Collections From Credit Report
The final step is looking at how to get collections off credit report files, because this item is damaging our credit score. We’re going to discuss how to dispute credit report items, or how to challenge items on your credit reports.
We’re going to exercise more of your consumer rights, this time granted by the Fair Credit Reporting Act (FCRA). This federal legislation enables us to dispute and challenge any item on our credit reports, so long as we believe it’s made in error, misleading, or inaccurate.
We can file our dispute online, over the phone, and by mail. Once the credit bureaus get it, and find it valid, they’re required to investigate the item. During which, they’ll contact Portfolio Recovery Associates and ask them to verify the account.
As per our settlement agreement, Portfolio Recovery won’t verify our account with the credit bureau’s investigation. They actually call it a re-investigation. Nevertheless, the FCRA, very clearly says any item that can’t be verified must be removed from our credit reports. This is how to remove collections from credit report, and legally.
It also works with judgements, and that is one of the ways the new data requirements, we mention at the outset of this article have made it much easier today to remove public record from credit report files, than ever before. It’s best to avoid that, if possible, and address this issue with Portfolio Recovery before it balloons into a bigger problem.
In sum, your credit score is just like your Grade Point Average (GPA) in school days past. It doesn’t matter if you’re acing all your courses, if you’re failing underwater basket weaving, because this one negative mark is going to ruin your overall GPA.
This is also true of your credit score. FICO very clearly and openly shares this. And this is why it’s so critical to clear credit report dings, blemishes, and remove any negative items. We encourage our members to consider, professional, legal, and legitimate credit repair 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 client’s remove collections, charge offs, late payments, judgements, liens, and 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 on how to fix credit score with Dan Willis, sign up for our free newsletter and join our congregation.
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