Sometimes, if a person waits too long to pay an overdue credit card bill, the credit card company will decide to sell the debt to another party, such as a collection agency, or else hire an outside party to take over collection duties on the debt. When this happens, the debtor's situation will not change drastically. However, he may want to take measures to prevent himself from falling victim to various collection actions.
Repayment
If possible, it is always a good idea for a person to repay his credit card bill. Unlike some types of loans, credit card loans often continue to snowball in size, accumulating interest penalties and punitive fees until they have reached many times the original size of the loan. In addition, the more deeply in debt a person becomes, the more his credit rating will suffer. Therefore, a person should, if he can, pay the collection agency the money owed.
Credit Reporting
When a credit card debt is sent to a collection agency, the credit card company will report this action to a credit reporting bureau -- the company responsible for giving an individual a credit score. Upon being placed in collection, the company will downgrade an individual's credit score over this debt to the status of "in collection." The longer the debt remains listed as in collection, the longer a person's score will be in decline.
Lawsuits
Once a debt is with a collection agency, the debtor must also worry about being the target of a breach of contract lawsuit. Collection agencies use many tactics to encourage people to pay the money they owe. Among them is suing the debt in court, alleging that the person has violated the terms of his credit card contract and consequently owes the collection agency damages. To prepare for this, the person may wish to contact an attorney.
Settlement
If the debtor is found liable in a lawsuit, it can culminate in the forcible seizure of the debtor's assets, such as through wage garnishment or bank account freezing. The debtor may wish to contact the collection agency preemptively. The person may be able to work out a deal in which the agency either settles for partial payment of the debt or allows the debtor more time to pay by modifying the loan terms.
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