How to find out what you have in collections

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Image: Thoughtful young woman looks at papers lớn learn how debts in collections affect credit scores.

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In a Nutshell

If you have debts in collection, that usually means a third buổi tiệc ngọt is trying to lớn retrieve payment for your debts on your creditor’s behalf. Debt collection is a federally regulated process, and you have rights that collection agencies must respect. While debts in collection can negatively affect your credit scores, the severity of the impact diminishes over time.
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Learning that you have debts in collection can add a lot of stress and anxiety khổng lồ your life.

If you’ve fallen behind on your bills or debts, a debt collector may liên hệ you. Debt collectors are typically people or agencies paid by creditors to lớn collect on certain past due debts.

But don’t panic if you have debts in collection — and don’t ignore the debt collectors either. Instead, educate yourself about your rights, the effects on your credit, và your best options for working with debt collectors. Here’s what you need khổng lồ know so you can move forward.

What does it mean lớn have a debt in collections?

When you have a debt in collections, it usually means the original creditor has sent the debt to a third-party person or agency khổng lồ collect it. Credit thẻ debt, mortgages, tự động loans & student loans are a few types of debt that can be passed on to a debt collection agency.

Most lenders will try to lớn collect the debt themselves before resorting khổng lồ writing it off and passing the collection lớn another party. Typically, past-due accounts won’t be charged off và sent lớn collections until they’re 120 lớn 180 days late.

If you have debt that’s past due and you’ve been contacted by someone who claims khổng lồ be from a debt collection agency, be careful. There are scammers that masquerade as debt collectors.

Here are a few telltale signs that you could be dealing with a scammer instead of a legitimate debt collector, according to lớn the Consumer Financial Protection Bureau.

They withhold information. Debt collectors must give you all the information you need to verify a debt.They pressure you to lớn pay by money transfer or a prepaid card. Scammers push borrowers khổng lồ use these types of payments because they can be difficult to lớn trace.They threaten you. Scammers may try to bully a payment out of you by threatening jail time, acting lượt thích they work for the government or saying they will tell your family, friends or employer.They ask for a lot of personal information. Don’t ever give your Social Security number, ngân hàng account number or other sensitive information over the phone to a debt collector until you’ve verified they’re legitimate.They hotline at strange times.

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If you’re getting a call from a debt collector before 8 a.m. Or after 9 p.m., there’s a chance you could be dealing with a scammer.

Most importantly, don’t rush khổng lồ make payments to lớn any debt collector if you don’t recognize the debt they’re trying khổng lồ retrieve. If you’re worried that you’re dealing with a scammer, ask for a company name and tương tác number. Then check with your original creditor khổng lồ see which collector it has assigned the debt khổng lồ (if any).

How will a debt in collections affect my credit?

Credit bureaus assign late payments to lớn various categories, such as 30 days late, 60 days late & 120 days late. The longer the payment is past due, the more it can hurt your credit score. For example, a payment on your credit report that’s 120 days late will have more of an impact on your scores than a payment that’s 30 days late.

Unfortunately, a debt in collections is one of the most serious negative items that can appear on credit reports because it means the original creditor has written off the debt completely. So when a debt is sent khổng lồ collections, it can have a severe impact on your credit scores. That’s why working hard to get current before an trương mục enters collections can help your credit recover faster from a late payment.

Additionally, lenders also may consider frequency of debt collections. For example, someone who’s had only one debt transferred lớn collections may have an easier time getting approved for credit than someone whose credit report shows multiple debt collections.

If you already have debts in collection, the good news is that the impact on your credit scores will diminish over time. & eventually the debt collection will fall off your credit reports completely. Generally, an trương mục in collection will remain on your credit reports for seven years.

What are my debt collection rights?

The Fair Debt Collection Practices Act is a federal law that limits what a debt collector can say and do. The law requires a debt collector khổng lồ send you a written notice within five days of contacting you for the first time with the following information:

How much money you owe on the debtThe name of the collectorSteps you can take if you don’t think the debt is yours

If you don’t think the debt is legitimate, you can dispute it within 30 days lớn the debt collector or with the company reporting the debt. If you dispute a debt, the collector must send written verification, such as a copy of a bill, before contacting you again lớn collect payment.

Here are a few more of your debt collection rights under the Fair Debt Collection Practices Act.

Time và place — Debt collectors can’t contact you before 8 a.m. Or after 9 p.m. Unless you agree. They also can’t contact you at work if your employer doesn’t allow its employees khổng lồ take personal calls.Harassment or abuse Debt collectors can’t threaten you with physical violence, use obscene language or lie to you about how much you owe or your federal rights.Attorney representation Normally, if you’re being represented by an attorney và the debt collector knows, they must communicate with your attorney & not you personally.

Your debt collector can’t discuss the details of your debt with anyone other than yourself, your spouse or your attorney. If they contact your friends, family or co-workers, it can only be to lớn retrieve your liên hệ information.

To learn more, read our full breakdown of your debt collection rights.

Should I pay off collections debt?

Whether or not you should pay off a debt in collections will depend on your personal financial circumstances and convictions. But if you’re paying off collections debt with the hope of improving your credit scores or you’re worried about a lawsuit, here are a few things to lớn consider.

Credit-scoring factors khổng lồ consider

Even if your lender uses a credit-scoring mã sản phẩm that ignores zero-balance collection accounts, that doesn’t necessarily mean paying off your collections debt will dramatically improve your scores. If the debt collection was from six years ago, for example, its impact on your scores may have already been low.

And if you have multiple debt collections on your credit report, paying off a single collections trương mục may not significantly raise your credit scores. But if you have a recent debt collection and it’s the only negative thành tích on your credit report, paying it off could have a positive effect on your score.

Is the debt time-barred?

Finally, take note that if your debt is time-barred — meaning the statute of limitations (the time limit for legal kích hoạt over the debt) has passed. In this case, your debt collector may no longer have the right to lớn sue you và win a judgment. But in some states the clock can restart if you make a written acknowledgement of the debt or make a payment toward it.

What’s next?

If you’re looking for help with managing your debt, you may want lớn set up an appointment with a credit counselor. A National Foundation for Credit Counseling-certified counselor could help you create a debt management plan, which may reduce the collections calls you receive and limit your interest charges & fees.

Some debt collectors may be willing to lớn negotiate a debt settlement or payment plan. If you decide lớn go this route, the CFPB recommends that borrowers try to negotiate their debts themselves before hiring a debt settlement agency. Here are a few reasons why.

Many debt settlement companies charge expensive fees.Your debt collector may refuse to lớn work with the debt settlement company.The debt settlement company may recommend that you stop paying on all your debts, which can cause you to rack up more late penalties & fees và further damage your credit.Since debt settlement companies often encourage borrowers khổng lồ stop paying on their debts, if you work with one & take their advice, you could provoke a creditor lớn sue you for your unpaid debts.

If you decide khổng lồ work with a debt settlement company, never agree lớn pay upfront fees before a debt has been settled. As an alternative to a debt settlement agency, you may want lớn try setting up a không tính tiền consultation with a bankruptcy attorney khổng lồ learn all your legal options.