Expert: Apex Credit Services, LLC - 12/28/2007

Question
I entered into a credit counseling program back in 2006 and since then it has helped to manage payments to the 5 creditors I owe to.  One of which has now sent my debt to a collections agency seeking a settlement of less than the remaining balance, they say they are saving me $800 less.  The credit counselor had negotiated a monthly payment with the creditor - it was all agreed upon.  My counselor has told me that to settle with the collections agency puts an even worse mark on my credit plus the $800 that wasn't collected goes most likely to another creditor who will try to collect.  Everything I have been reading says to never speak to collections agencies on the phone, however I have not received one piece of mail from them  They have only made phone calls to my parents repeatedly.  Bottom line is they are telling me not paying is a worse mark on my credit and they will write off the $800 and my credit counselor is telling me the opposite.  Who do I believe?  I enrolled in credit counseling to not have this happen.  Why all of a sudden is it?  Do I pay the collections agency the monthly fee w/no interest that they have offered or do I continue to work through my credit counselor?

Answer
Dear Sir or Madam:

    Credit counseling is generally a bad idea.  To be candid, bankruptcy is a much better option if avaliable insofar as both look identical on a credit report.

    That being said, whether or not you should pay this account, whether in full or via settlement, depends on it's type and age.  If it's a charge-off still owned by an original creditor then, yes, you would be well advised to pay it in order to prevent it from updating a delinquent balance each and every month.  If it is not a charge-off and say, the run of the mill medical collection, then paying it may harm you insofar as the date of status could be updated to the date payment was made.  This would make the account appear brand new at least in terms of scoring.

    In any event, I would discontinue my use of credit counseling.  If you are concerned about your credit scores, these companies are little use.  You may consider using a company, such as Apex Credit Services, LLC, which can actually improve your scores.

                   Apex Credit Services, LLC