How Soon After You Miss Payments on Credit Cards Are They Turned Over to Collection Agencies?

An account in collections lowers your credit score.
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If you experience financial difficulties that cause you to miss a few credit card payments, you may be living in fear that a debt collection agency will soon be tracking you down. While rules regarding delinquent accounts vary by company, many are sent to a collection agency when payments haven’t been made for 180 days. Companies are not required to inform you that your account has been sent to a collection agency.

Avoiding Debt Collectors

Credit card companies want you to pay your debt; they would rather not hand your account off to a collection agency, so they may be willing to work with you. Try to negotiate lower monthly payments or a lower interest rate until your debt is paid off. Credit counseling and nonprofit organizations that consolidate your debts into one monthly payment are other options to pay your debts so they’re not sent to a collection agency.

Impact of Late Payments

Making a credit card payment even one day late can result in substantial penalty fees. Companies can increase your interest rate up to 29.99 percent if you make late payments. A payment more than 30 days late is noted on your credit report and stays there for seven years, lowering your credit score.

Collection Agency Rules

Credit card debt is covered under the Fair Debt Collection Practices Act, which regulates when and how debt collectors may contact you. Unless you agree to it, a debt collector is not permitted to contact you at inconvenient times or places, such as in the middle of the night or at work. If you want a debt collector to stop contacting you, send the collection agency a certified letter requesting to be left alone. While this does not relieve you from payment obligations, the agency can no longer contact you except to say there will be no further contact or to notify you that the agency is planning to take a specific action, such as filing a lawsuit against you.

Handling an Account in Collections

An account in collections can have a substantial negative impact on your credit score, as it is marked on your credit report with a “Collections” status and can remain intact for seven years. If you settle the debt with the collections agency, you may be able to lessen the impact by negotiating with the agency to change the status to “Paid in Full” or “Settled.” Staying up-to-date on all other outstanding accounts during this time is essential, as this can help raise your credit score.

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