What Is a Collection Account?
When you take out a loan, credit card, or any other form of credit, usually you must agree to make timely payments on your account.
If you don't make your payments on time, your account will eventually become past due and—if you miss enough payments—fall into default. If you default on a credit account, an apartment lease or another type of service, the creditor may assign your debt to a third-party debt collector, or collection agency. These companies attempt to collect debts from consumers whose accounts are in default with their original creditors. Collection agencies are allowed to report your collection accounts to the three credit reporting companies, Experian, Equifax and TransUnion.
The debt collector will likely contact you by phone or letter asking that you make payments to them to satisfy the debt. When you make payments to the debt collector, they will keep a portion of the amount as their fee and return the rest to the original creditor. Once your collection has been paid off, your credit reports will be updated to show the account has been paid and reflect the new zero balance.
Collection accounts, like most negative credit report entries, can remain on your credit reports for up to seven years from the date your account first became delinquent with the original creditor. Collections can cause your credit score to suffer. When you settle a debt with a collection agency, we can help try to get that account removed from your credit report. We’ve helped thousands of consumers with debt collectors and credit report problems. Contact Agruss Law Firm today to learn about your consumer rights.
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