In the event that one of your bills gets sent to a collection agency, it is important to know what to do right away. Just because you miss a payment does not mean you are automatically considered delinquent. You usually have a grace period of thirty days to pay. After that thirty-day period, you will likely get reported to credit bureaus.
At some point, your creditor will consider the unpaid bill a loss and might sell your debt to a collection agency to get some of the money you owed back. Payment history is the most heavily weighted factor of your credit score, so missing a payment will affect it negatively. As soon as your creditor reports the debt as a charge-off, the charge-off will appear on your credit history for seven years. The higher the amount of the missed payment, the greater the hit to your credit score.
If you begin receiving calls from debt collectors, never make a payment on a debt without verifying it first. Make sure your name is attached to the debt, not someone else’s. Debt collectors are required to send you a debt validation letter within five days of their first contact under the Fair Debt Collection Practices Act.
If the debt is minimal, do your best to pay it off right away. If it is large, ask to be put on a payment plan so that you can eventually pay it off over time; most debt collectors will negotiate a repayment plan to make sure they get a 100% return. You can also try to settle with them, in which case you would pay less than what you owe but much faster than on a standard repayment plan.
Keep a record of every communication you have with a debt collector in writing or on the phone. Save copies of everything and take detailed notes.
If it is not possible to pay off the debt you owe in any of the above ways, consider speaking with a trusted bankruptcy attorney about your options.