What You Need To Know About Debt Collectors

It can happen to anyone: life gets hectic and a bill accidentally goes unpaid. If your payment is more than 30 days past due, however, you may be turned over to a debt collection agency. If this happens to you, don’t panic. Read below to learn about your options when dealing with a debt collector.

Your Credit Score Might Not Be Impacted

By law, you must be at least thirty days late on payment to be reported to the three credit bureaus, and you’ll get an even longer leash with medical debts – they can’t be reflected in your credit score for 180 days. This means that working quickly with the debt collection agency may save you from a credit ding that could take several years to overcome.

You Can Choose to Work with the Original Creditor

Do you have a longstanding relationship with the creditor in question? Do you prefer speaking with a customer service representative, rather than a third-party debt collector? If so, it’s within your consumer rights to reach out to the original creditor and work out a payment plan. If you’re a first-time offender, some companies may even offer forgiveness on late fees.

Monthly Payments May Not Be the Best Option

Although debt collectors will typically offer a monthly payment plan to allow you to pay off a debt slowly, impacting your finances less in the short term, this isn’t the only option available. If the thought of sending a check to a debt collector every month gives you heartburn, consider asking for a settlement instead. Typically, you can negotiate a lower lump sum payment, as long as you can pay the agreed upon amount in full over a short period of time.

Debt collection doesn’t have to be a smear on your financial record. Knowing your options means you can take control of your financial health and correct a missed payment with minimal damage.

Image via Flickr/GotCredit