When your account goes to "collections."

Hey Billeaters.
 
Personally I have never had any difficulty getting my bills paid, but these days more and more folks find themselves in a bit of financial difficulty due to unemployment, reduced hours and mortgage issues. Here are a few things to consider for you Billeaters to consider if you find yourself in a financial bind and you begin to miss payments.
 
A collection account is a late account that has been forwarded to an agency (also known as asset recovery agency, debt buyers, collection agency or collection agent) for lack
of payment.  An account is forwarded to a collection agency usually when an account becomes 90 to 120 days late. 
 
Collection accounts are purchased from the original creditors for a fraction of the original amount owed.  Creditors send accounts to collection agencies to remove them from their accounts receivables records and then write-off the full debt owed as a loss.  Creditors benefit in two ways, one for writing off the debt as a loss on their taxes and two when
the money is collected which can be recorded as a profit or accounts receivable.  
 
A paid or unpaid collection account remains on your credit report for seven years from
the date of first delinquency. Unfortunately many collection agencies re-age the account changing the date of first delinquency to the date they received the account which
extends the time the account remains on your credit report.
 
A collection agency holds a collection account for a few months, it they are
unsuccessful in collecting on the debt owed, and the account is forwarded to another collection agency. This process continues until the account is paid or legal action is
taken against the consumer.
 
Many times when you provide a date when the bill is paid they will ask you why, why not now or similar questions trying to use psychological tactics to get you to pay the bill
while they are on the phone.   Remain calm throughout the conversion.  A collection
agent may ask you to repeat what you just said or write it down. These are all tactics
to make you powerless and confused.  Here are 5 tips to help you deal with collection accounts.
 
1.  Keep all copies of your credit reports (current and old).  If you have made any late payments or have neglected to pay any delinquent accounts compare you old credit reports with your current credit reports to verify all information on your credit report
and pay close attention to the dates for collection accounts, bankruptcies, accounts included in bankruptcies and other delinquent accounts. 
 
2.  When you receive a letter from a collection agency verify the company is licensed to collect money or delinquent debts, verify the company is a reputable company and that the company has a legal right to collect money or your debt.
 
3.  You may request that the collection agency contact my mail only (use the term
cease and desist).  A collection agency's goal is to get the money owed paid as soon
as possible.  They will continue to ask why you can’t make arrangement today. 
 
4.  If you setup payment arrangements and fall behind on your arrangement the collection agents are advised to refuse to extend time between payments, shorten the time
between payments, and refuse to reduce the monthly account.
 
5.  Whatever arrangements you make with a collection agency stick to it, don't let the collection agency change your mind about what you can afford, use emotions, or scare you into doing something you don't want to do.