Discovering you have debt in collections can be stressful and confusing. But what exactly does it mean and how can you get out of it? Let’s walk you through how to identify if you have debt in collections, understand the collection process, and tips on taking the appropriate actions to address the situation before it gets out of hand…*

What does a debt in “collections” mean?

When you fail to pay a debt, the original creditor may eventually give up on collecting the money themselves. At this point, they typically have three options:

1. Sell the debt to a collection agency for a fraction of what you owe.
2. Hire a collection agency to collect on their behalf.
3. Write off the debt as a loss (though you may still be responsible for it).

Once a debt goes to collections, it can significantly impact your credit score and financial well-being. Collection accounts can remain on your credit report for up to seven years from the date of the first missed payment.

Signs your debt may be in collections

A few red flags that you should take seriously:

1. You receive collection notices

The most obvious sign is receiving letters, emails, or phone calls from collection agencies. By law, debt collectors must send you a written “validation notice” within five days of first contacting you. This notice should include:

• The amount you owe.
• The name of the original creditor.
• Your rights under the Fair Debt Collection Practices Act (FDCPA).

2. Your credit report shows collection accounts

Collection accounts appear on your credit reports and typically cause a significant drop in your credit score. You’re entitled to a free credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) once every 12 months.

When reviewing your credit report, look for:

• Accounts with “collection,” “charged off,” or “transferred” status.
• Unfamiliar company names (collection agencies often have different names than original creditors).
• Negative marks in the public records section.

3. You’re receiving calls from unknown numbers

Frequent calls from numbers you don’t recognize could be debt collectors trying to reach you. Collection agencies often use multiple phone numbers for outreach.

4. You’ve stopped receiving bills from a creditor

If bills from a creditor suddenly stop arriving, it might indicate they’ve given up on collecting and transferred or sold your debt to a collection agency.

5. You’re served with a lawsuit

In more severe cases, you might receive notice of a lawsuit filed against you for unpaid debt. This typically happens when the debt is substantial and other collection attempts have failed.

How to confirm if you have debt in collections

If any of the above apply to you, here’s how you can confirm your debt is now in collections:

Check your credit reports

The most comprehensive way to identify collection accounts is to review your credit reports from all three major credit bureaus:

1. Visit AnnualCreditReport.com (the only federally authorized source for free credit reports).
2. Request reports from Experian, Equifax, and TransUnion.
3. Carefully review each report for collection accounts.

Many credit monitoring services and financial institutions also offer free credit report access or monitoring.

Contact the original creditor

If you suspect a particular debt might be in collections:

• Call the customer service number of the original creditor.
• Verify if your account is still with them or has been sent to collections.
• Ask for details about the collection agency if applicable.

Verify collection notices

When you receive a collection notice, don’t ignore it. Instead:

• Request debt verification in writing within 30 days.
• Ask for proof that you owe the debt and that the collector has the right to collect it.
• Don’t make any payments until you’ve confirmed the debt is legitimate.