There are many myths and legends regarding the behavior of debt collectors and the way they collect. Below are several concerns most often cited by individuals regarding debt and collections.
Does a collection ever go away?
No, a collection report does not go away. You will receive a collections report on your credit for the debt but even after that report expires you will still have to pay it back. The report will remain a part of your financial history so when applying for loans or lines of credit you will have that mark as a negative factor until the debt is paid.
How long before debt is written off?
Debt is never "written off." While the collections report will be removed from your credit after 7 years, it is still a debt you need to repay. After the 7-year period ends the collections report expires and no longer has a negative effect on your credit. However, it will still be a debt you will have to repay.
Can a debt collector refuse a payment plan?
Debt collection agencies are not legally obligated to accept payment plans. They can refuse any payment plan for any reason. The biggest concern you need to have about your debt is it being sold to a collector that does not have an interest in setting up a payment plan or reduced sum. Though it may be in the best interest of certain institutions, a payment plan can be a way to avoid having a debt collection report drop your credit score for 7 years. A collection report can cause a drop of 100 points or more on your credit during this time. As long as you are making regular payments, there will be no collections report associated with your credit. It is very important to take advantage of one if the opportunity arises.
This should help you understand how debt collections operate. It is important to every person's financial health to be sure to stay in control of their debts and take advantage of any payment opportunities or reduced sums before the debt is sold to a more aggressive collection agency.