What happens when you're turned over to collections?

What Happens When Your Debt Goes into Collections?

When you fail to make payments on a debt, it can eventually be turned over to a collection agency. This can be a distressing and overwhelming experience, but it’s important to understand the process and your rights.

What is a Collection Agency?

Collection agencies are third-party companies that specialize in pursuing overdue accounts. They are typically hired by creditors who have been unable to collect the debt themselves. Collection agencies use a variety of tactics to contact you and attempt to recover the outstanding balance.

How They Contact You

Collection agencies may contact you by phone, mail, email, or text message. They are legally required to identify themselves and provide information about the debt you owe. If you receive a communication from a collection agency, it’s important to respond promptly.

What Happens if You Don’t Pay?

If you fail to pay the debt, the collection agency may take further action. This could include:

• Reporting the debt to credit bureaus, which can damage your credit score
• Filing a lawsuit against you
• Attempting to garnish your wages or seize your assets

Your Rights

When dealing with a collection agency, it’s important to know your rights. You have the right to:

• Demand validation of the debt
• Dispute the debt if you believe it is incorrect
• Negotiate a payment plan that works for you
• Be protected from unfair or abusive collection practices

How to Handle Collection Agencies

If you receive a notice that your debt has been turned over to a collection agency, follow these steps:

• Contact the agency immediately. Respond to their communication and provide any necessary information.
• Request validation of the debt. Ask for a written statement that includes the amount owed, the original creditor, and the date the debt became delinquent.
• Dispute any incorrect information. If you believe the debt is incorrect, dispute it in writing within 30 days of receiving the validation notice.
• Negotiate a payment plan. If you can’t afford to pay the debt in full, negotiate a payment plan that works for your budget.
• Keep records of all communication. Document all phone calls, emails, and letters with the collection agency.

Remember, dealing with debt can be challenging, but it’s important to remain calm and take the necessary steps to protect your rights and financial health.