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Q: Debt collection ( Answered 5 out of 5 stars,   2 Comments )
Subject: Debt collection
Category: Business and Money
Asked by: thehambloke-ga
List Price: $2.00
Posted: 01 Dec 2004 00:36 PST
Expires: 31 Dec 2004 00:36 PST
Question ID: 436491
Assume that you owe some amount of money to an organization (corporate
or govt.). They turn it over to a debt collection agency.

Does the mere act of turning it over to a collection agency put a
black mark on your credit history? Or is it only after the debt
collection folks have tried talking to you, and you haven't
cooperated, then the black mark is put on your credit history?

Which party, and when, actually calls the credit folks to tell them you owe money?
Subject: Re: Debt collection
Answered By: vercingatorix-ga on 01 Dec 2004 06:57 PST
Rated:5 out of 5 stars
Any party in the collection process can report a delinquent payment to
a credit-rating agency.

The company to whom the debt is owed can make that call, though many
companies simply don't bother to do so. That is why many late payments
will never show up on a credit report. If the billing company doesn't
tell the credit-rating agency about the delinquency, the rating
company has no way to know about it.

Regardless of the actions of the company that owns the debt, a
collection agency that purchases the debt or is hired to collect it
can report it to credit-rating agencies if it wishes. Again, if the
collection agency does not inform the credit-rating agency, news of
the debt will not affect the credit report. Some collection agencies
will report the debt, but some will not, using the threat of a bad
mark on the credit rating as leverage to get the debtor to pay.

The short answer is that no party is obligated to inform the
credit-rating agency, but any party connected to the debt can do it.
Your best bet for avoiding such reporting is to deal directly with the
organization currently collecting the debt and agree to a payment
plan. You may wish to offer better payment terms in exchange for their
not reporting the debt to credit-rating agencies, but do not count on
that. Some companies have strict guidelines they follow regarding when
to report delinquencies, and some collectors will not honor any such
agreement, even if you can get them to promise they will not have the
debt put on your record.

thehambloke-ga rated this answer:5 out of 5 stars

Subject: Re: Debt collection
From: neilzero-ga on 01 Dec 2004 04:35 PST
In The USA any dues paying member of one of the 4 credit rating
companies can report that a debtor is behind on thir payments, so the
black marks can start long before a debt collection agency gets
envolved. Sometimes the dues paying member makes errors which
generally are not corrected, until the debtor checks their credit
reports and requests correction. My guess is the mere act of turning
it over to a debt collection agency does put a black mark on your
credit history if a member reports it to one of the 4 credit rating
companies.   Neil
Subject: Re: Debt collection
From: loanofficer-ga on 13 Dec 2004 17:23 PST
There are actually only three credit bureaus: Experian, Equifax, and
Transunion. Normally the "collection account" appears on a bureau only
after the collection agency has had it for 30 days (per Federal law). 
However, don?t expect them to contact you during this time or to give
you a full 30 days before a bureau is notified of the collection
account.  The collection agency has the power to do what it wants for
the most part.  A courteous client that pays the collection in full
may escape the mark on his/her bureau.  A rude client that wants to
settle for 50 cents on the dollar will most likely see that collection
the next time they pull their credit report.  That has been my
experience with that particular situation.

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