What Should a Consumer Do When a Credit Card Company Turned Over Debt to a Collection Agency?

by Lisa McQuerrey
Ask collection agencies what your options are.

Credit card collection agencies are companies that attempt to collect on past-due credit card accounts. Card companies turn over late accounts to collection agencies and give them the authority to negotiate with card holders and come up with payoff solutions. If you ignore the collection agency's attempts to contact you, it's only going to further damage your credit. Better to face the situation head on and work with the collection agency to find a way to pay off what you owe.

Make the Call

Once your credit card account gets turned over to a collection agency, your credit card-issuing company may or may not continue to speak to you if you call customer service. They may just refer you back to the collection agency. Regardless, you're likely to get a letter in the mail outlining your existing debt obligation and giving you options and timelines for taking care of your finances. You may also get phone calls from the collections agency. Don’t ignore these attempts at communication, or you risk seriously damaging your credit rating.

Broker a Deal

Try to broker a deal with the collection agency. The agency has the ability to bargain on behalf of your credit card company, and they’re likely to give you different debt repayment options. For example, you may be able to settle your debt for less than what you owe, or enter into a repayment agreement with the collection agency. Don't agree to any terms you know you can't meet.

Dispute the Letter

If you are turned over to a collections agency and you don't believe you violated any of the contractual agreement you had with the credit card company, dispute the claim in writing. Draft a letter to both the credit card company and the credit collection agency and describe what you feel the discrepancy is. Attach copies of previously paid credit card bills, cancelled checks or statements to support your claim. Send the letters by certified mail to ensure they are delivered and follow up to make sure the problem is addressed and resolved.

Face the Consequences

If you have been legitimately turned over to a collections agency and you don't have the money to pay, the credit card company will likely report you to the credit bureaus as an uncollectible debt. If you have any options available to help you avoid this scenario, such as borrowing repayment funds from a family member, consider it as a viable alternative. Making other arrangements will help you protect your credit rating.

Don’t Take Abuse

The Federal Trade Commission Fair Debt Collection Practices Act prohibits collection agencies from harassment when they attempt to get payment from you. If you get calls in which a collection agent yells at you or calls you names, contact the FTC and detail your experience.

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