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Is debt recovery possible after paying collections accounts?

Residents in Washington, D.C., who are facing financial difficulties may wonder whether they should attempt to pay off old debts. In some cases, mortgage or other loan applicants may be denied funding until they resolve outstanding consumer debt. Although it may seem wise to pay off accounts that are in collections, some residents worry that their credit score could drop if they reopen those old financial wounds.

Not to worry, say financial experts; if you are looking to rebuild your credit, you can address those old accounts without concern. Some people are afraid that the "date of last activity" is the most important aspect of an overdue debt. In other words, they believe that addressing an account in collections could make the debt appear more recent than it actually is.

When you are deciding how to handle an old collections account, it is wise to take a variety of debt relief factors into consideration. First, if your debt is seven years old or older, it may not even show up on your credit report! Most of these accounts are purged from credit histories after seven years and 180 days have passed from the point that the consumer first fell behind in payments.

Further, it is important to remember that paying off these collections accounts in full may not actually be the best practice. In most cases, the result is the same whether you negotiate a settlement or pay the full amount. Consider consulting your creditors to see if you can reach a financial middle ground.

Area residents who are struggling with financial woes may benefit from consulting a Washington, D.C., bankruptcy attorney. These professionals may provide additional information about credit histories and reports. In some cases, debt relief could involve Chapter 7 or Chapter 13 bankruptcy, but other options are also available.

Source: Credit.com, "Will Paying an Old Debt Hurt My Credit Scores?" Gerri Detweiler, Mar. 17, 2014

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