Failure to repay your creditors on time can lead to relentless collection calls. You may be tempted to disregard the debt after your account is closed. However, neglecting to respond to bill collectors can create greater legal and financial woes. A court judgment can harm future borrowing power, and could affect job searches, promotion opportunities and insurance rates, according to Steven Bucci of Bankrate.com.
Stop the Calls
Collection calls can be a nuisance. Ignoring the creditors often increases the frequency of the calls and your level of anxiety. Collections calls can begin at one call per day and increase to calls every hour. You can avoid disruptive collections calls by paying the collections agency. If you cannot repay the debt in full, find a payment amount that works for both you and the creditor.
Legal Notices
When you receive written notification from the collections agency, always read the information. You may learn opportunities to resolve the debt that are much more lenient than your expectations. For example, your creditor may reduce the debt amount as a last resort. However, your lack of response could lead to a legal action. Collections agencies can file a private lawsuit to collect the debt you owe.
Credit Score Rescue
Accounts in collections are bad debts. Your credit score is negatively impacted with each bad debt reported monthly to the credit bureaus. The sooner you can resolve the debt by paying the balance in full or making a payment arrangement, the sooner your credit score can be rehabilitated. A positive credit history increases your opportunities to open credit accounts in the future, as well as qualify for the best interest rates on a loan.
Considerations
The benefits of repaying collections debt far outweigh the disadvantages. You may have to tighten up on your spending to accommodate the debt repayment, but the sooner you pay, the better your chances of maintaining your financial credibility with the creditor. Some creditors do consider how long your account is in collections when reviewing a request to re-open your account. Maintain your financial credibility by resolving your debt as soon as the collections calls begin.
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