Questions About Credit Card Collection Accounts

If your delinquent credit card debt gets turned over to a collection agency, you have a collection account. Collection accounts can appear on your credit report and may influence your credit score. Having a collection account may also result in frequent phone calls from debt collectors. Many consumers have questions about how having a collection account affects them and what debt collectors can and cannot legally do to collect a debt.

Collection Agency Reporting

Not all collection agencies report collection accounts to the credit bureaus. When a collection account appears on your credit report, however, it will negatively influence your credit score as long as the debt you owe is over $100. Paying the collection account will not improve your credit score unless the collection agency agrees to remove the derogatory notation from your credit record after receiving payment. Otherwise, the Fair Credit Reporting Act dictates that the collection account can remain on your credit report for seven years from the date your original credit card debt went delinquent.

Debt Collector Behavior Regulations

The Fair Debt Collection Practices Act (FDCPA) regulates debt collector activity and the actions collection agents may take when attempting to collect a debt. Having a collection account does not mean that you will automatically be subjected to harassment or abuse from debt collectors. If debt collectors threaten you, call you at odd hours, use abusive language against you or continue to telephone you after you request, in writing, that all communication stop, the company is in violation of the FDCPA and you have the right to file a lawsuit.

Debts You Don't Owe

If you are pursued for an old credit card debt that does not belong to you, you have the right to dispute the debt with the collection agency reporting the debt and the credit bureaus. If the collection agency that owns the debt can neither provide proof to you that you owe the debt nor prove to the credit bureaus that the debt is legitimate, it must cease collection activity immediately and the credit bureaus will remove all evidence of the collection account from your credit report.

Reasons For Lawsuits

If you don't pay a collection account, the collection agency that owns the debt may opt to file a lawsuit against you. Each state only allows civil lawsuits over unpaid debt to be enforced for a limited amount of time. This is known as the debt collection statute of limitations. If the debt collection statute of limitations in your state has expired, you must appear in court and notify the judge of that fact in order to have the lawsuit dismissed. Keep in mind, however, that submitting a payment on a collection account can reset the statute of limitations. Contact your state attorney general's office to find out the statute of limitations for unpaid credit card debt in your state.