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Collections Step by Step

Step by step, here's what happens when you have an account to go into collection:


1. You miss or skip a credit card payment or fail to pay another type of bill, such as your phone bill or electricity bill.


2. The creditor may give you a grace period during which to make good on the bill. Typically, it takes longer than 30 pays for an account to be sold to a collection agency or placed into collections status. They'll notify you, usually more than once, that you haven't paid and ask you to pay up. If you still don't pay, they can move your account into collections.


3. At that point, the original creditor could turn the collection account over to a collection agency. Typically, this occurs within a few months of the original delinquency date, and the original account may appear on credit reports as a "charge off," which essentially means the creditor has given up trying to recover the debt.


4. Just because the original creditor has given up, however, doesn't mean you won't hear from a collection agency. Once they receive the account from the original creditor, the collection agency is free to pursue you from all or part of the debt, provided they adhere to federal regulations governing collections.


5. If you're contacted by a collections agency, you have the right to the detailed accounting of the debt they claim you owe. Contacting a collections agency won't impact your credit report.


Virtually any times of unpaid debt can be sent to collections, including:

  • Credit cards

  • Student loans

  • Auto loans

  • Utilities

  • Services

  • Government

  • Medical

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