Well there was no shock with the latest report from the BBB that credit collection agencies remain amongst the tops for most complaints by consumers. Even the most careful consumer can occasionally find themselves dealing with a collection agency. Overdue magazine subscriptions, parking tickets, video store late fees, library fines, medical bills and more can all be sold to collection agencies. To make matters worse, collection records are extremely damaging to credit scores and will remain on credit reports for 7 years whether or not the account is paid off later.
image source, flickr.com
What should you do if you find yourself sucked into the collection world? Here are a few tips:
• Take overdue bill notices seriously. Call the creditor immediately if you believe the bill is inaccurate or fraudulent. Don’t ignore these warnings.
• Pay up. It is sometimes better to pay a bill you feel is inaccurate before it is sent to collections rather than continue to protest and risk damaging your credit. You can always continue to dispute the bill after it has been paid.
• Know your rights under the Fair Debt Collection Practices Act. Collectors cannot contact you at unusual times or places, cannot threaten or harass you and cannot tell you false things.
• Understand how collection accounts are reported. Once the collection account appears on your credit report it will remain there for 7 years. The record will not be removed from your credit report if you pay off the debt. Also, you may see multiple records appear on your report if the collection debt is sold.
• If you do decide to pay the debt, negotiate a reduced settlement and get everything in writing before you send any money.
• Watch the collection agency closely. The agency may try to collect more than your agreed settlement or to remove extra funds from your checking account. Having a written agreement can help you stop these actions.
• Keep detailed records. Save copies of letters and other communications with a collector for future reference. You’ll need these documents if the collector tries to change the date of your record so it will remain on your credit report longer.