When you have a debt in collections, your credit score suffers and new opportunities for financing become limited. You’ll also start receiving countless calls and letters from debt collectors, adding stress to your everyday life.
Rather than letting your financial issues continue to spiral out of control, create an actionable plan for paying off collections in a way that best works for you. Here’s how to do it.
What is debt collection?
Debt collection is a process where companies attempt to collect unpaid debts from borrowers. A debt goes to collections when it’s unpaid for an extended period of time, usually at least several months. Once the loan is in default, the original creditor may sell it to a collection agency or hire an agency to collect the balance on its behalf.