Deal with Your Debt: The Right Way to Manage Your Bill$ and Pay Off What You Owe

Dealing with Collection Agencies

If you've left a bill unpaid for so long that it's been turned over to a collector, your options and choice of best tactics have changed.

No longer can you hope to elicit the creditor's interest in rehabilitating your debt and keeping you as a customer. At this point, your account typically has been “charged off”—an accounting term that means the creditor has decided that repayment is unlikely. The creditor usually takes a tax write-off for the loss and passes the account to collections.

Some creditors do their collections in-house using a special department. Others give the accounts to outside collection agencies on a “contingency” basis, which means the collector keeps a portion of what's collected. Finally, ...