A collection agency is merely a company hired
by a creditor to collect
a loan. There’s nothing more annoying than to find that
your account has been turned over to a collection agency,
and little more damaging to your credit history. Here are
some facts - and some myths - about collection agencies and
what they can and can’t do.
- A collection agency is a private company - not an agency
of the government. But their practices are controlled by
the same regulations that rule over other companies.
- You can negotiate with a collection agency. As a rule,
that company has “bought” your outstanding bill
from the company you originally owed. That means they paid
a percentage of the amount of your outstanding balance
and hope they can collect the full amount from you. They’re
often willing to collect even part of the debt and might
write off the balance in exchange for a lump sum payment.
A credit counseling company may have better luck with those
negotiations, simply because they aren’t emotionally
involved and have had experience with collection agencies.
- Some people think that a bad credit incident goes away
after seven years and use that as a reason to ignore the
collection agency. In truth, each time the collection agency
takes action on your account, the clock starts over. Deal
with them quickly. It will make the problem go away sooner
than waiting for them to simply give up their efforts.
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