Southwest Credit Systems is a large, first and third party, collection agency headquartered in Carrollton, Texas. They collect on a wide swathe of types of consumer debt including: utilities, financial services, telecommunications, cable, government, property management, education, and more.
According to their website, they manage billions of dollars of consumer debt. And while Southwest Credit Systems was originally founded in 1974, in 2015 they changed their business name to SWC Group.
If you’re currently dealing with Southwest Credit Systems, it’s mission critical that you have a good grasp on your rights as a consumer. Many of these are granted under the Fair Debt Collection Practices Act (FDCPA).
Please, avoid what most people do and just pay off collections, with the belief this is how to improve your credit score. It makes logical sense, but it’s not reality.
The only thing that happens when you just pay off a collection is the status of the item is changed on your credit report. It’ll go from an unpaid collection to a paid collection.
A paid collection is still a negative item and it’s going to cause you to have a low credit score. Anthony Sprauve, a spokesman for FICO, says a collection on your credit reports can damage your score by up to 100 points.
It’s true a paid collection, is slightly better than an unpaid collection, but they’re both going to damage your creditworthiness. Further, this is exactly what Southwest Credit and every debt collector want you to do, just pay collections.
Southwest Credit Collection Methods
In addition to the phone calls, letters, and even emails demanding payment, Southwest Credit is also going to report negative information about this account on your credit reports. If they’re unable to collect payment, they have two options.
They can sell the collection rights to your alleged debt to another collection agency. This new agency will begin contacting you for payment, along with reporting more negative information on your credit reports.
And the most common result of unpaid collections is a civil lawsuit, as in you’ll be sued. Southwest Credit Systems can do this, or it may be another collection agency that purchases the rights to your account.
The goal is to get a judgement against you, because this enables stronger collection methods and potentially wage garnishment, liens placed against you and or your property, and even asset seizure.
Investigate your local laws, because the exact methods do vary from state to state. Regardless of where you live getting hit with a judgement on your credit reports, it will decimate your credit score.
SWC Group, L.P.
4120 International Parkway,
Carrollton, Texas 75007
How To Deal with Southwest Credit Systems
1. Request Debt Validation
One of your consumer rights under the FDCPA, is to request debt validation on your account. You should make your request in writing, and send it using certified mail with return receipt requested.
Because you didn’t open an account or do any business directly with Southwest Credit, we need to request validation. This is essentially saying you first prove this debt is legit, you own the rights to it, tell me who the original creditor was, the dates, etc.
According to the FDCPA, if they don’t validate your account, then by law it’s supposed to be forgiven. As in you’re no longer legally responsible for payment and it should be removed from your credit reports.
2. Age of Account
If they do validate your account, then you’ll receive documents, showing this information. We need to examine this paperwork in detail, because we’re looking for the date of last activity on your account.
You see, for the overwhelming majority of types of consumer debt, our politicians decided to pass laws regulating how long we’re legally responsible for payment. This is called the statute of limitations.
It’s a state law, and does vary, so investigate your local listings. Typically it’s about seven years, and then by law, you’re no longer legally responsible for the debt.
This applies to charge offs, utilities, credit cards, medical collections, retail, telecommunications, virtually everything. The few exceptions include federal taxes and federal student loans.
Warning, one of the most common tactics of collection agencies is to re-age consumer accounts, and often this is done illegally. It’s not even uncommon for people to be sued for debt, that long ago expired under the statute of limitations.
3. Negotiate a Settlement Agreement
If your collection account is validated, and within the statute of limitations, you next want to negotiate a settlement agreement directly with Southwest Credit. There are two important steps here.
First, always negotiate to settle your account for less than the total balance. Frequently you’ll be able to pay off collections for as little as 10% up to 40% of the balance.
For example, with a $500 debt, you may be able to settle for 30% or $150. The exact amount will depend on how old your debt is, the older it becomes the less you’ll likely have to pay.
They’ll be happy to accept a settlement for less, and this is standard operating procedure. Partly because your total balance mushroomed as a result of exorbitant interest rates, and even collection fees added to it.
The second part of your agreement is mission critical. You must get Southwest Credit Systems to agree in exchange for your payment, they’ll stop reporting your account to all three credit bureaus.
Some folks would argue this is where you should demand a pay for delete. This is where you would require them to delete the negative item from your credit reports, in exchange for your payment.
Based on experience, we’ve found collection agencies are virtually never going to agree to a pay for delete. Instead, we’ve found it much more effective to simply get them to agree they’ll stop reporting your account information, and in the next step, we’ll clear your credit report of the negative item.
4. Remove Collections From Credit Report
We’re now looking at how to remove collections from credit report files, and we’re going to exercise more of your consumer rights. Specifically, those granted by the Fair Credit Reporting Act (FCRA).
This legislation gives you the right to dispute and challenge the accuracy of any item on your credit reports, so long as you believe it’s inaccurate, made in error, or misleading. We’re of course going to dispute the Southwest Credit Systems item.
You can dispute your credit report three ways: online, over the phone, and by mail. Once the credit bureaus receive your dispute, and find it valid, they’re required to investigate the item.
During which they’ll contact Southwest Credit and ask them for verification of the account, and all relevant details. As per your settlement agreement with Southwest Credit, they’re not going to verify your account during the credit bureaus investigation.
To comply with the FCRA, this means the credit bureaus must delete the item from your credit reports. This is how to clear your credit history, and legally.
If you’re working to fix your credit score, it’s imperative to remove any negative and derogatory information from your credit reports. Please, be very cautious when dealing with debt collectors. This industry is akin to the wild, wild, west.
Our government issues fines to this industry every single year, because many companies totally disregard the law. On a sidebar, seven years is the maximum amount of time a negative item can remain on your credit report. There is no minimum amount of time any item must remain.
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 courses, if you’re failing Gym class, because that negative mark is going to ruin your overall GPA.
This is also true of your credit score. FICO is very transparent about sharing this fact. And this is why it’s so essential to clean up 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 their client’s successfully remove collections, late payments, charge offs, 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 about how to get credit score up with Dan Willis, sign up for our free newsletter and join our congregation.
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