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How Accounts Go Into Collection

Last Updated: June 1, 2010

How did you credit card account go into collections? It's obvious, isn't it? You didn't pay your bill. We get so many questions about collection agencies and the whole collection process, that we decided to post a whole page on the subject.

What is a Collection?

A collection account is the term used to describe a person's loan or debt which has been submitted to a collection agency through a creditor. The collection account normally appears on the credit report of that person and will be on that report for seven years. If a debtor pays off a collection account, it will not be removed but just be marked "Paid".

Typically, credit card debts may be turned over to a collection agency 180 days after the debt is owed. In the case of medical collections, some hospitals - especially for people who don't have any insurance - turn medical bills over for collections immediately. These collection agencies are called "debt buyers" and they purchase debts from creditors for a fraction of the value of the debt and pursue the debtor for the full balance owed. Some debt collectors work on a commission basis and are very motivated to convince the debtor to pay the debt often to the point they are threatening or harassing the debtor.

Junk Debt Buyers (JDBs) specialize in collecting old debts and debts supposedly discharged through bankruptcy. Much of this "paper" is turned into securities traded on Wall Street.

A collection may only go on your credit report 180 days after the debt is owed, according to the Fair Credit Reporting Act.

Here are your rights regarding collectors/collections.

Here are some helpful hints about dealing with collection agencies and getting collections off your credit report.