How To Resolve A Collection Account On Your Credit Report
Have you ever checked your credit report only to find that a new, unexpected company has opened a collection action in your name? The first moments can be daunting, but understanding what the collection account is for, who to contact to discuss your options, and how best to tackle paying down your overdue account is critical to a healthy financial future.
The goal of this Money Chat is to help you understand the best ways to resolve a collection account that appears on your credit report.
First Steps
Once you first identify a new collection account in your name, understanding both your rights and the account are critical first steps. If your account from your originating creditor is now overdue and placed with a third party for collections, read through the Fair Debt Collection Practices Act (FDCPA) FAQ to better understand your rights as a consumer and your responsibilities as you work through the process.
Once you have a better understanding of how overdue collections work, it is important to explore your credit report and history to better understand what account is being collected. Review the inquiry on your account to ensure it’s accurate (that the collection account in your name is from purchases you made) and the organization collecting upon your account is legitimate (simple searches online should bring up the organization’s information and compliance record).
Contacting The Collection Agency
After reviewing your account, it’s time to speak with representatives of the collection agency or originating creditor. Before reaching out, collect any and all information you can about your account. Representatives will most likely ask for account numbers, full names, and other personal information to ensure they are speaking with the account holder directly.
All collection agencies and services will have detailed hours of operation on their main website and phone numbers to call to discuss account options, but there may also be online, self-service portals that are more accessible.
When contacting the agency, it’s important to remember that any future electronic communication you wish to receive may still need your verbal or electronic opt-in. If you choose to use a self-service portal, look for communications options to ensure that you receive timely information about your account in the future. If you speak with a representative, be sure to have your account number handy for discussing your account as the representative will need to spend a few moments ensuring that you are the account holder to avoid any FDCPA compliance issues.
Resolving Your Account
After contact and with more information regarding your account, it’s time to set up a plan of action to resolve your account that is currently bogging down your credit report. There are a few steps you can take to best resolve your account, but depending on the nature of the credit agency/originating creditor and what type of debt you are resolving, exploring educational tools may be the best way to take the first step.
Free Financial Education Tools
Consumers looking to resolve overdue accounts may be conflicted on how to best approach paying down the account. Luckily, many creditors and collection agencies provide free, comprehensive financial education tools that can help you better understand your current situation and the credit cycle.
Groups like the Receivables Management Association International (RMAI), ACA International, Receivables Info, and the U.S. Government have educational programs that range from financial education games to quizzes on how to best invest your money. These resources are available for all ages and can help not only resolve your overdue account but set up your family for financial success later on down the road.
Payment Plans for Debt
The most common way of resolving overdue accounts is the simplest—pay down the amount you owe. Originating creditors and collection agencies will work with you to set up a payment plan that satisfies all parties. Payment plans can be managed through self-service online portals or by speaking to representatives. These plans will ensure that timely payments are made to avoid any penalties for not paying down overdue accounts, like unwanted litigation or garnishments.
Account Negotiation
If you believe your account is incorrect, or that the amount exceeds what you owe, it is also possible to negotiate with certain collection agencies. Negotiations aren’t common, but some agencies will discuss lowering the total amount owed in exchange for either lump sum account payments or even for just setting up guaranteed regular payments. It is worth discussing with representatives of the agency that has contacted you to see if they will negotiate with you on your overdue account.
Whether your account is with your originating creditor or not, exploring educational tools, understanding your rights as a consumer, and preparing yourself for regular payment plans will ensure that any collection account placed on your credit report can be easily removed over time.
Additional Resources
If you want to learn more about financial literacy or your rights as a consumer, please visit the Receivables Info Resources Page.
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The information contained in this article is meant to serve as general guidance for consumers and not meant to serve as comprehensive financial advice. For questions about your individual circumstance, finances, or accounts, please contact your creditor(s) and/or financial advisor directly.
Thank you to our Sponsor Orion Capital Solutions, LLC
Orion Capital Solutions, LLC is a professional, nationally licensed collection agency headquartered in Orchard Park, New York. Founded in 2018, we provide outstanding services to our clients and consumers through the integration of technology and an experienced and compassionate team. We have over 30 years of experience in delivering exceptional results for creditors and realistic solutions for consumers.
