Having debt in collections likely indicates you’re behind on payments (probably at least 120 days late) and your creditor (the credit card company, lender, etc., where your account originated) has sent your account to a collection’s agency.
Debt Collectors typically call for the following reasons:
Remind you to pay your creditor so that your debt isn’t charged off.
Inform you that your debt has been charged off or sold.
Locate someone else who has an overdue debt.
Notify you of legal actions being taken against you.
There are consequences of being in collections and it can impact your financial health. Here are a few ways:
Lower Your Credit Score: Your payment history makes up 35% of your score, so having an account in collections can have a big impact and it can remain on your credit report for up to seven years.
Affect Your Ability to Get Loans. Having an account in collections on your credit report could make it hard to take out loans, credit cards or other financial products as the lender will have concerns about their loan getting paid back.
Legal Consequences: If you fail to settle your account in collections, the debt collector could file a lawsuit against you. If they win, they could garnish your wages or take funds directly out of your bank account to repay your debts.
Accounts in collections will affect your credit, which will impact any future loans or lines of credit you attempt to get. If you need help settling debts and putting a stop to harassing phone calls, give me a call at (800) 822-7120 or email at firstname.lastname@example.org.