What is a Collection?

If you’re behind in paying your bills, or a creditor’s records mistakenly make it appear that you are, a debt collector may be contacting you.

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector is someone who regularly collects debt owed to others.

This includes collection servicers, attorneys that collect debt, and debt collectors that buy delinquent debts and then try to collect on them.

Some collection agencies are internal departments or subsidiaries of the company that owns the original debt. Typically these types of collection agencies try to collect debts for several months before passing them on to a third-party agency or selling the debt in its entirety.

The term collection agency is usually applied to third-party agencies, called such because they were not a party to the original contract.

The creditor may also assign accounts to collection servicer on a contingency-fee basis.

The collection agency servicing the account makes money only if payment is collected from the debtor.

Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee could range from 10% to 50%.

Who Regulates Collection Agencies?

Collection agencies used to be regulated by The Federal Trade Commission (FTC) but, are now under the regulation of the Consumer Financial Protection Bureau (CFPB).

The CFPB, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect a debt.

According to the FDCPA a debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night unless you agree to it.

And debt collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.


How can I Stop a Debt Collector From Contacting Me?

Next time you receive a call from a collection agency, let the representative tell you who they are and why they are calling, then state the following, “Please stop calling me, if you wish to contact me, please do so via standard mail.”

Then, thank the representative for their help, and hang up.

The collection agency will have a 7-day window to stop all calls.

You can also send a Cease & Desist request to the collection agency which collection agencies have to comply with.

You can stop ALL communications but, our suggestion is that you allow collection agencies to contact you through the mail so you can still have one open line of communication.

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How does a Collection Impact my Credit?

A collection can have a very adverse effect on your credit report and lower your credit scores.

Whether it’s a $35 medical collection or a $5,000 collection for a credit card bill – collection accounts will lower your credit scores.

Collection agencies are also allowed to report their accounts to a consumer’s credit report. This means that it’s not uncommon to see 2 accounts (original creditor & collection agency) reporting for the same debt.

This obviously hurts the scores even more.

Old collections impact credit scores less than new collections because recent account activity is such a large factor in a credit score.

How Long Can a Collection Report on My Credit?

A collection account can report for a period of up to 7 years from the date of the first key delinquency.

For example, if a credit card account was charged-off on 11/2016 and the collection agency acquiried the debt on 11/2019; the 7 year clock starts counting down from 11/2016 NOT 11/2019.

Colelction agencies sometimes attempt to reage debt and make it look newer than it actually is in order to keep it on a credit report longer but, this is illegal according to the FCRA and FDCPA.

Remember, the 7 year clock start at the date that the account becomes delinquent, not from the date that the account was opened or from the date that the collection agecny acquired the debt.

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What to Do After a Collection?

A collection account reporting on your credit reports is going to cause substantial negative issues to your credit scores.

Your first reflex may be to settle the debt for less than the full balance and ultimately, that may end up being a good place to start.


Paying off a collection account could actually lower your credit scores.

Remomber, the last 6 months of payment history impacts your credit scores more than anything.

Paying off a collection that hasn’t reported activity in a few years will lower the balance to $0 (which is good) and change the status from “In Collection” to “Settled/Paid” (another good thing) but, the account will re-report new activity which may lower your credit scores for the short term.

This is also why disputing a collection account may actually cause more bad than good.

Sometimes a direct creditor intervention or a debt validation request accomplishes everything a dispute does, if not more, without any negative side-effects.


The way that you should address a collection will depend on what your short and long terms goals are and the activity that the account is reporting.

On top of everything, if the debt is past the statute of limitations, settling the debt may be a waste of money.


You should also try to be proactive and work on the collection but, it’s important to work smart and prioritize your actions based on your goals. has helped thousands of clients improve their credit scores and remove collection accounts from their credit reports.

If you have a collection on your credit reports contact to find out how we can help fix your credit and improve your credit scores.

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