When you have a debt go into collection, it means that you have not been making the appropriate payments or responding to your lender suitably. Putting a debt into collection means that your lender wants to take additional action to secure the funds from you.
While you do not want your debts to go into collection, there are a few steps you will need to be aware of if it should. Knowing how collection works and what is expected of you when a debt goes into collection will ensure you come out in the most favorable position.
Your debt may go into collection if you have defaulted on a loan for three to six months. Your service debts, utility debts, credit card debts, medical debts, or debts owed to the government are the most common kinds of loans that will go into collections.
What Happens When a Debt Goes to Collection?
When a debt goes to collection, your lender is basically saying they are unable to get the money from you on their own. They may decide to turn your bill in to a collection agency or they may sell the debt to a buyer. The credit bureau will be notified that your debt has gone into collection, which can really hurt your credit score. In this situation you have a couple options, you can either repair your credit yourself or hire professional credit repair services. Just remember even the best credit repair services don’t offer guaranteed results for your credit score or removal of debts.
You will be notified that your unpaid bill has gone into collections. While you may hope ignoring the debt will make it go away, not responding to the notice could actually mean you will need to appear in court. If you’re hoping to wait for the statute of limitations for the debt to run out, you could actually end up being sued by the debt collectors.
If you are able, your best step is to pay off the debt in full. For small bills that maybe you’ve forgotten about, paying off the debt as soon as you’re alerted by the collection agency can end the process before it becomes an issue.
Another way to respond to the debt is to talk to the collectors about a repayment plan. If you have been unable to pay your debt because the monthly amount is too high, a repayment plan can help you stay on track with your payments and ensure the collection agency get the money they’re after.
It is important to keep in mind that collection agencies can be difficult to deal with at times. Because many agents work on commission, they may be rude or disgruntled if you’re trying to make small payments over a long period of time. This can mean many angry phone calls or harsh messages in your future.
To minimize the amount of time you need to deal with the collection agency, make your payments as high as you can manage. Try to save as much cash as possible toward the debt while you are negotiating so you can may a major chunk of it right away. Try a loan consolidation company to help matters.
Before you come to a final agreement, ask the collection agency to validate the debt. This means that they need to go through the process of proving that you actually need to repay the money and that the debt is valid. This extra step can prevent you from paying money on a debt that has expired or is incorrect.
However you choose to pay the collection agency, be sure it is in your own control. If you give the agency access to your back account or credit cards, you could run into the problem of them withdrawing too much. Once they have the funds, it can be nearly impossible to get back. Always stick to paying with a check if possible.
Know Your Rights With Collection Agencies
When a debt goes into collections, you may experience a mild level of harassment from the agency. While they may try to act like it’s acceptable behavior because you owe them money, you should know that you are protected from abusive, unfair, or deceptive behavior.
Know your rights when it comes to dealing with collection agencies and stick to them. If you believe your rights have been infringed upon, contact an attorney to speak with them about the process.