Debt Free Destiny

Debt collectors are ruthless.  Ideally, you'll do everything in your power to prevent an account from going into collection – even if it means paying for a loan using a credit card!  Sometimes people decide not to pay for an account because they want to dispute something to do with the account – but it's better to pay the amount in question and continue your dispute afterwards.  You can always get a refund or credit applied to your account if you win what you're disputing.  If you are moving or have recently moved, don't forget to fill out a change of address form with the post office to ensure that your mail is forwarded to you.  Do this even if you manually change your address with individual accounts because it can be several mailings before the account is updated to reflect the new address.

Debt collection is a quickly growing industry, currently at the $15 billion dollar per year mark.  Thousands of companies buy debts from other creditors for much less than what is actually owed – and then attempt to recover the debt from the consumers.  Debt collection companies earn their profits when consumers repay their debts, or at least pay more than what they paid to “buy the debt”.  Collections agencies buy a variety of debts from credit cards, video stores, utilities, medical offices, and cell phone companies, among others.

Account in Collections

If you were unable to prevent your account from going into collections, you should receive a letter from the new owner of the account.  Look at the letter carefully and if there are any problems that need to be disputed, be sure to do so within 30 days.  Keep accurate notes and records for future reference in case you need to dispute something else with the collector in the future.

Your credit report is going to reflect the account that is in collections.  It will remain on your account for 7 years, even if you pay the debt back.  Watch your credit report because it's not unusual for collectors to report incorrect information that will help them with negotiations at a later date if necessary.

Fair Debt Collection Act provides a number of protections for consumers.  If a collector gets out of hand with phone calls, you can request that they only contact you via mail.  There are a number of other protections for you under this act, and worth looking into if you feel you are being harassed by the debt collectors.

So what can you do once the account is in collections?  Contact the collector and negotiate a deal to pay it off.  If you have other debts that are not in collections though, you should concentrate on those first since the account in collections will be on your report for 7 years whether you pay it or not.  If paying on that debt makes it difficult to keep up with your other debts, it really doesn't make much sense to make it a priority until you pay off some of your other accounts.