How long do I have before My Account goes to a Collection Agency?
Everyone gets busy, and if you’re like most people, when life gets hectic you tend to forget a few things. If one of those things is to pay your bills, then odds are good that you’ve missed a payment this month. In other cases, you might have just run out of money before your an out of bills. Either way, the company you owe money to will have it’s own way of dealing with the problem.
For the most part, every utility and bank gives customers a 30 day grace period before reporting their late payments to a credit agency. Before this, however, the customer is almost always charged a late fee. Since this late fee comes from the utility or bank, however, a customer has to negotiate with that entity in order to remove the charge from his or her account. Often, a customer’s first “offense” is forgiven and the charge is removed, while subsequent “violations” will result in the customer paying the fee.
According to state and federal laws, a customer has 30 days to make the payment, including the late fee, before the utility or bank can report the account to a credit bureau. Keep in mind that this is only the minimum time that must elapse before the company CAN report the late payment; some companies will give their customers longer than this before making a report. There are many different credit agencies, and many of them charge banks and other companies a nominal fee to file a report. This means that some businesses choose to delay reporting.
Once a payment has been missed for more than 30 days, an additional 30 days must pass before a company is allowed to send the account to a collection agency. According to federal tax law, however, an account has to be delinquent (that is, no payments of any sort made on it) for at least 90 days before a company is allowed to write it off . For this reason, most accounts are not turned over to a collection agency until they are at least 90 days past due.
If you’re really unable to make your bill payments, you might want to consider reducing the amount you owe every month with debt consolidation. This can be a good way to reduce what you pay and keep your accounts out of collections.