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Sometimes you know it’s coming, like when an unexpected medical bill goes unpaid for a little too long. And other times it’s a total shock, like when that unpaid library fine comes back to haunt you years later. Either way, finding out you have debt in collections can be a frustrating and scary situation — especially if it comes with a firestorm of unwanted phone calls and letters from debt collectors.

One of the worst parts of dealing with a debt collector is that it can be hard to tell when they’re legitimate and when they’re not. You might find yourself wondering, “How do I know if I owe these people? Do I get proof that it’s really mine? Really, what happens when a debt is sold to a collection agency?”

The questions can go on and on, but one thing is for sure: Ignoring the debt won’t make it go away. So, if you find yourself in this position, read on to learn what happens when a debt is sold to a debt collector, and how you can try to resolve it.

What Happens When a Debt Is Sold to a Debt Collector

There may come a time after a bill has gone unpaid that the creditor might assume you’re never going to pay, and then sells the debt to a debt collector or collections agency to recoup at least some of their money. Once that happens, the original creditor no longer has a right to collect from you, as that debt is now entirely owned by the agency.

But how quickly can a debt be sold to collections?

It’s unlikely that a bill that’s 30 days late will go to collections. Instead, you could incur a late fee and, if the account is a credit card, possibly even an increase in the APR. Another month late could see the creditor having their internal collections department communicating with you to bring the bill current.

If you hit the 90-day mark, however, things might start to get hairy. While there’s no rule that this will happen, a creditor could decide to “charge off” the account and sell it to a debt collector or collections agency. If your creditor does decide to charge off your account, the charge off shows up on your credit report (as well as the account closure), and a new account with a debt collections agency could open up. From that point on, you owe the debt to the collections agency.

What You Should Do Next

Chances are, you’ll probably know when a debt has gone to collections. After all, collections agencies aren’t known for their subtle tactics in asking for repayment. However, one way you can find out if an account has gone to collections anytime is by reviewing your credit report. There, you’ll see all reported financial accounts and their statuses listed under your name.

On the other hand, if you found out about the debt through a collections agency, here’s what you may decide to do next:

  • Ask for certain information about the debt from the collections agency. You’ll want to know things such as the original creditor, how much you owe, fees they might have added on, and more.
  • You can also contact your original lender if you’d like to confirm that your account was sold to the same collections company that’s contacting you. Obtain the name, address, and phone number of that company so you can compare it to the letters and phone calls you’re getting.
  • Once you know the debt is yours, you can try to work out a deal with the debt collections agency. That deal could mean settling the debt for less if you have a lump sum of money that you can pay right away, or it can mean setting up a payment plan for the debt.
  • Understand that there is a statute of limitations on debt, after which you can still be sent letters for collections but you no longer legally have to repay. The clock starts on this as soon as your account has gone delinquent. However, if you were planning on relying on the statute of limitations on debt once the account has gone to collections, know that making even one payment on the debt will restart that clock.

Awareness Is Key

It’s natural to want to bury your head in the sand the minute you hear the word, “collections agency,” but that’s the worst thing you can do.

Remember that these agencies most likely bought your debt for much less than the original amount, which means they could potentially end up ahead if they collect even close to what you owe. This may be your leverage to get them to work with you, whether that be through a settlement or a payment plan.

No matter how dire the situation might seem, you have options. Stay aware of the situation, keep in communication with the collectors, and remain calm so you can work out a plan that is best for your financial situation and that everyone will be happy with.

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