What Happens If You Ignore A Collection Agency?

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In case you are at default with credit card payments or even the utility bills, there is a chance that your account details will be passed on to a collection agency. This idea of debt collectors hounding over compels you to hide your head in the sand. You hope they will eventually go away on their own.

We understand that dealing with debt collectors can be scary, especially for the first-timers. But let us tell you one thing for sure, there is a lot of misinformation about debt collectors. These myths are the main reason why many people choose to ignore collection agencies.

Besides these, the regulations imposed by the government also push people away from seeking the assistance of collection agencies. All of these factors combine to shrink the industry revenue. So much so that in 2019, the revenue of the US collection industry will contract at an estimated rate of 1.5%. This makes us curious to explore the reasons behind people ignoring debt collection agencies. More importantly, what happens if you ignore a collection agency?

Let’s have a look at some of the consequences that tag along with this ignorance:

It hurts your credit

Credit issuing companies manage their costs and cash flows by outsourcing debt collection services. These debt collection agencies have the duty of reporting all accounts to the credit bureau. If you ignore the calls and letters from the agency, the collector will report the delinquency. That will hurt your credit.

Even if you choose to pay the debt, they will make entries of late payment and subsequent charge-off. This will also damage your credit score. Consequently, your chances of getting higher credit in future will dim out.

You don’t know if a debt is legit

All collection agencies have to follow the Fair Debt Collection Practices Act. Check out the rule book at Debt Collection Agencies Texas, and you will know it’s true.

There are specific regulations on what they can and cannot do to collect funds. But there is a possibility that debt collectors get the wrong information. Or maybe, the dishonest collectors tend to pursue consumers about bogus debts.

Therefore, do not ignore them. Instead, you must pay careful attention to every debt call and letter you receive. In case of doubts, you can immediately go for the debt validation process to demand the proof of your debt. It is your right under FDCPA.

Your debt gets bigger

If you ignore a debt long enough, there is a chance that the series of calls and letters will stop. But the debt doesn’t go away. It will stay on your credit report and continue to expand.

There will be further additions to it like interests and collection costs. And later when you try to get into business with the same account, you will have to clear off the past payments. This time, the payment will be much higher than that of a few months or years ago.

You may also like to read, “Debunking Hard Money Loan Myths“.

Collection agency keeps running after you

The central job description of a collection officer is to get payments from the consumers. They will keep trying to reach out to you until you pay them. However, as mentioned earlier, ignoring may put them away, but that won’t cut off the debts altogether. You can also write a cease and desist letter. It stops the collector from trying to contact you.

Keep in mind that your debt will remain and continue to affect your credit scores. Sometime later, the agency will assign your file to another officer who will restart the run after you. The only option is to deal with debts right away.

Ignoring rules out much better options

Instead of ignoring the collection agency, you can seek options that are far more favorable. There is a possibility that they will make the cut or expand the time frame for payback. But you can only avail these options if you choose to communicate openly. They may allow you to settle the debt for far less than what you owe. That is why the financial experts go strong with the advice: “Negotiate, not ignore.”

It will improve your credit score. Eventually, the financial health of your agency or account will improve, and there will be better opportunities for the future.

You get sued

Constant ignorance of the calls and letters might compel the debt collectors to sue you. Typically, there is a statute of limitations which implies that there is a particular time limit for debt enforcement. Collectors may sue you after the statute has expired.

You must take notice of the lawsuit and try to get rid of the balance as soon as possible. If not, the collection agency may go after your bank account and try to take their cut from your wages.

Final Verdict

We can make a statement that downsides of ignoring a debt are way higher than the upsides. We may be focusing on the direct benefit, but ignorance will drag in pretty serious consequences, in the long run. It’s always better to settle the debt or dispute its validity (if it is not authentic). You can even go for legal help in this regard.

Would you rather pay off a debt or ignore it for as long as possible? Let us know!

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