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I received a notice from a collection agency...what do I do?

If you have received a new notice from a collection agency that they recently acquired a debt and you have 30 days to reply, this is called a Dunning Letter. This means that they have not reported this collection to the credit bureaus yet and they are giving you 30 days to reply or take care of the debt. If you do nothing, they will likely report it to the credit bureaus as a collection and your score is going to drop.

If you pay it within the 30 days you will avoid the collection from hitting your credit report. This is also one of the few times that I would suggest doing a payment plan. As long as you create an agreement with them and stick to it they should not report it to the credit bureaus. Make sure of their policies before doing this.

Be advised that you can negotiate this debt with them. Remember they likely bought it for pennies on the dollar and may be willing to take a loss on the full amount.

If this is a collection for a charged off loan, credit card, repossession or something along those lines, the account itself is probably already on your credit report and reporting negatively. These companies will often outsource the collection to a 3rd party agency. If they report as well, you can have the same collection or account reporting negatively on your credit report twice. This is legal.

What is not legal, is if the collection company decides to sell the debt to another collection agency and they both report. Only 1 collection agency can try to collect at a time and has the legal right to report. The original creditor and the collection agency who owns the debt currently are the only companies allowed to report the debt.

I always recommend working with a collection agency through writing. I do not recommend phone calls. Keep written track of everything you do. Working through phone calls can be very intimidating, as these companies train their employees to be very stern. Some can be harassing and even make threats, which technically they aren't supposed to do. You can ask them via writing to stop calling you. They have to abide by this request. They will still be able to continue to collect and sometimes that may mean via a judgement or lawsuit. If this happens do not be afraid. You can still try to work something out with them or seek legal advice on how to proceed.

I also recommend if a collection company asks for proof of your residency or a drivers license to not supply them with this information. They do not need it. This only empowers their case against you.

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