Options for Handling Credit Card Collection Companies

Published on Feb 07, 2014 12:15 pm

Credit card collections are serious business. If your account is in collections, it’s probably because you missed multiple monthly payments and your credit card company charged off the account. Once your account gets turned over to a collections company, they can call you repeatedly in efforts to get you to pay the debt, potentially try to reach you through other means or even sue you to get a payment. While you have some options for how you handle them, you will almost always have to deal with them eventually.

Paying Credit Card Collections Companies

If you can afford to pay off the debt, paying the collector in full will usually make the phone calls and letters stop and make the debt go away. It will still show up on your credit report as a collection, but it will show that it was paid in full. Before you pay, you may want to get a letter from the agency that says that your payment will pay off the account and that the account will be closed and reported to the credit agencies as “paid in full.” Another strategy can be to pay them with a money order or other form of payment that you can use to prove that you paid your debt in full.

Negotiating With Credit Card Collections Companies

Another option is to negotiate with the collection company. Sometimes, a collector will offer you a payment plan or will even take a partial payment to consider the debt paid. If you pay off the balance with a partial payment, it may show up as “settled in full” when you get your credit report and score checked – which isn’t the same as “paid as agreed” and could impact your score. Similar to making the payment in full, you should also get written confirmation that the credit agency will accept partial payment to clear out the account.

Disagree With Collections Companies

If you don’t think you owe the money, you can let the collector know this and request that it verify that you owe the debt. Typically, you will want to do this in writing and send the letter via certified mail to prove that you did it. If you want to do this, sending your letter within 30 days of when you are first contacted is usually necessary to protect your rights. If the debt collector cannot prove that you owe the money, it will have to stop attempting to collect from you and will also have to remove it from your credit report. More importantly, if this is an account you don’t recognize, it could be a sign of identity theft and you will want to take the steps to resolve the issue right away to prevent further potential damage.

(Don’t) Ignore Collections Companies

One option that could backfire is to ignore the debt collector. Eventually, a debt collector may choose to sue you. Once you get sued, it may be able to use the court’s help to garnish your wages or repossess your property to pay off your debts. In addition, the judgment will also go on your credit report and could do more damage to your score. Not responding to court papers could lead to even more serious consequences – including jail.



About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.



This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company.   © 2014 ConsumerInfo.com, Inc.  All rights reserved.

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