June 12th, 2012

I have an account in collections. What should I do?

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account in collections

Have you ever received a notice from a collections agency? You’re not alone. Nearly half of Credit Karma members currently have at least one derogatory mark, such as an account in collections, on their credit report. In our Credit Advice Center, members often ask about the best way to deal with debt collectors.

Here’s a quick step-by-step guide on what to do when facing an account in collections.

Check your credit score

If you received a letter or a call from a collections agency, first find out how the new collections account is affecting your credit score. The new account should show up in your Credit Report Card under derogatory marks, as well as your Credit Karma Notifications in your Score Center. You’ll be able to see how your score was impacted by the new derogatory mark.

Draft a debt validation letter

According to the Federal Debt Collection Practices Act (FDCPA), a collections agency must validate that they’re legally allowed to collect on your debt. Send a written request of validation within thirty days of receiving the first written notice of the debt and you’ll be within your rights, according to the FDCPA. You can see an example of a debt validation letter here.

The debt collector must stop attempting to collect the debt from you until they’ve sent a sufficient response to your letter. If they can’t validate your debt, you shouldn’t need to worry about repaying them. However, if they can validate it, you should work out a payment plan.

Negotiate an update to your credit report

If you have the funds to pay back the debt, first see if you can have the derogatory mark removed from your credit report. Write to the debt collector to ask if they’ll agree to remove the account from your reports if you pay it in full or pay an agreed-upon amount as settlement. This is called a “pay for delete” letter (example here). Do it in writing so that you retain a physical copy of the communication.

If the debt collector won’t agree to remove the account from your report (most probably won’t), write another letter to see if he’ll agree to update it to “Paid in full” once you’ve paid the debt. If you’ll be settling the debt (instead of paying it in full), he may agree to mark the account as “Paid – settled” instead.

Pay off your debt

Once you’ve negotiated with your debt collector, pay your debt as agreed. Keep proof of your payment for your records.

Monitor your credit report and score

When the debt collector has received and processed your payment, he should update your credit report to the status that you agreed upon: either by removing the derogatory mark, marking the account as “Paid in full,” or marking it as “Paid – settled.” If your credit report hasn’t been updated, you can dispute the account with the credit bureau or bureaus still reporting it. Here’s a guide on how to dispute credit report errors.

Check your credit score regularly to see how it’s affected by the account being removed or adjusted. Make sure you’re enrolled in credit monitoring so you can watch for a notification about the change.

is the Social Media Manager and Writer at Credit Karma.

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

90 Comments

  1. Hello guys,

    One of my payment gone to collection agencies and now it impacted my credit score by big number, is there any way to remove that remark my credit score can be restored? As per comments in credit karma i called them but they said they can not remove that remark. Only they will inform credit companies about full payment.

    Does anybody has any solutiont to repair that credit remark??

    Please suggest.

    bhavesh at 10:25 am on September 16, 2013
  2. Jenna

    Hi Bhavesh, if the collections agency isn’t willing to remove the mark, unfortunately it’ll stay on your report for up to seven years. You can only really remove it if it’s incorrect. You can learn more here: https://www.creditkarma.com/article/accounts-in-collections

    Jenna at 10:48 am on September 16, 2013
  3. I have a collection on my report,, It has been sold to another collection agency, is it legal to have it on there 2 times by different agencys?

    Kim at 7:14 am on October 21, 2013
  4. i have accounts in collections. how do i find out who they are so i can get it taken care of?

    ronald lee at 6:13 am on November 21, 2013
  5. Jenna

    Hi Ronald, we’d recommend going to http://www.AnnualCreditReport.com to learn more information about your accounts in collections.

    Jenna at 8:33 am on November 21, 2013
  6. I have a collections on my account and I don’t know where it’s from. I haven’t received a bill. It doesn’t list who it is here? How can I pay them if I don’t know who they are??

    Debra at 2:33 pm on December 3, 2013
  7. Jenna

    Hi Debra, we’re not a credit bureau, so we don’t have extensive insight into your credit report. To learn more about your account(s) in collections, we’d recommend pulling your full credit reports at http://www.annualcreditreport.com.

    Jenna at 7:59 am on December 4, 2013
  8. How do I find out who the names are of my accounts in collections??? Like I don’t know who they could be. I have 4. Someone told me they were hospital bills, an I have insurance, and have had insurance for a long time

    Alex at 5:14 am on December 21, 2013
  9. Jenna

    Hi Alex, we’d recommend pulling your full credit reports at http://www.annualcreditreport.com to learn more about your accounts in collections. Thanks!

    Jenna at 7:52 am on December 23, 2013
  10. Hi I have Credit Const in my collection report I don’t rememeber what it is how can I find out what Company I owe so I can pay it off.

    thank you.
    Ms. Landeros

    RAYMUNDA LANDEROS at 4:51 pm on January 12, 2014
  11. Mike

    Hi Raymunda – Thanks for the question! At Credit Karma, we focus on providing credit scores and financial resources. We’re not a credit bureau, so we don’t have extensive insight into your credit report. Visit http://www.AnnualCreditReport.com to access your three, free, government-mandated credit reports each year. Thanks!

    Mike at 10:05 am on January 14, 2014
  12. Hello on credit karma I have an open account with collections. I did the Annualcreditreport.com link and didn’t have the open collection account on there report. I don’t understand whats going on. How do I pay something or owe something when I cant get any information on collection.

    Javier at 12:32 pm on January 22, 2014
  13. Mike

    Sorry to hear about your confusion Javier. If you’d email us at support@creditkarma.com, we will be able to look into the specifics of your account. Thanks!

    Mike at 2:34 pm on January 22, 2014
  14. Hi, i am just shocked by seeing about derogatory mark in my credit report. I dont know who is that collection agent and why did this happened to me? If some thing goes wrong, how should pay them? how do i know the contact details of the collection agent. Please suggest. if i clear this, will it be removed from my account? Please help.

    Ravi Kumar Karri at 12:35 pm on January 23, 2014
  15. Mike

    I’m sorry to hear about that Ravi. As I mentioned to some others here, I’d suggest starting out by looking up your free credit report at AnnualCreditReport.com. From there you’ll be able to identify the specifics of the matter and contact the collection agency directly. Thanks!

    Mike at 3:35 pm on January 23, 2014
  16. Hello, I resently did the AnnualCreditReport got all 3 back and have
    2 bad mark’s in collection from two diffrent collectors. Both are medical and i asumed these were payed by my medical inssurace wen i visted the ER at those times between 2010 to 2012 however they were sent to these agents and i still have full healthcare coverage.
    My question is before i contact these companys is it possible for them to rebill the health inssurace instead of haveing to pay in cash thro a payment plan since they should have been payed to begin with

    Jacob at 6:48 pm on January 31, 2014
  17. kind of a silly question but when I was young I bought a timeshare and paid almost half of it off. Two years ago I got divorced and couldn’t make payments anymore and let it go but was surprised to find it still in collections. so my question is if I pay it off will I still be eligible to keep the timeshare or will it just close the account out of what I owe them? I would hate to pay it off and not own the timeshare because at this point my credit score has gone back up and I’m restarting my credit after almost 3 yrs of no credit history since my divorce.

    Cynthia at 3:56 am on February 1, 2014
  18. i have a collections on my credit account about a phone if i pay it off will it still make my credit report look bad how does it work????/

    jessy at 9:18 am on February 3, 2014
  19. Do all three reporting agencies communicate changes in a person’s credit history to each other? I have disputed several items on my credit report to Experian, and today they emailed me a link in response to my disputed negative remarks. Three remarks have been deleted from their credit report now. (Happy!) However, transunion still is reflecting those negative remarks. Will the other two reporting agencies follow suit? Or must I contact all three agencies separately in order to have these addressed?

    Pamela at 12:11 pm on March 4, 2014
  20. Mike

    Hi Pamela – Thanks for the question. You can read more on the dispute process here: http://www.creditkarma.com/article/dispute-credit-report-errors

    Mike at 4:39 pm on March 4, 2014
  21. My question is does annualcreditreport.com count as a hard inquiry on my score

    Simon at 8:54 am on March 7, 2014
  22. Mike

    Hey Simon – If you can’t find an answer to your question here I’d recommend asking it in our advice section (https://www.creditkarma.com/all/advice). Thanks!

    Mike at 10:26 am on March 7, 2014
  23. I just paid off some derogatory remarks off. Any idea how much my score could go up? Each was $200 and one was settled at $125 and another at $27 the other a full $200. I have one more currently under dispute but I hoping my score will jump from the current 641.

    Meagan Leigh at 11:01 pm on March 27, 2014
  24. How do I settle an account thats in collections?

    Jasmine at 3:27 pm on April 3, 2014
  25. Two things: First, an account “in collections” on my Credit Karma info was debt discharged in Bankruptcy and the collection agency reported it as a balance of $0, account status N/A. What does that mean?. Its still a derogatory remark and shouldn’t they take it off because it was discharged?. Second, the notes say “opened on” with a date that I KNOW I didn’t open any lines of credit because that was right before I filed. Does “opened on” sometimes refer to the date the original creditor sold the debt to the collections agency? Thanks.

    Lupe at 10:12 pm on April 23, 2014
  26. Mike

    Thanks for your comment Lupe. This sounds like a matter for our support team. Please email us over at support@creditkarma.com and we’d be happy to have a look. Thanks!

    Mike at 2:10 pm on April 24, 2014
  27. I have paid off a number of accounts that are showing on my credit reports and they are still showing as open and in collections. How do I get them to show as paid and closed? I have already contacted the collection agencies involved and they have assured me that they have contacted the credit bureaus, so what is my next step? Do I file credit disputes or what?

    BLM at 4:54 am on May 8, 2014
  28. Mike

    Good question, BLM. If you’re anxious to get these accounts off your report, you can file a dispute directly with TransUnion. You can find more information on the dispute process here: http://www.creditkarma.com/article/dispute-credit-report-errors

    Mike at 3:56 pm on May 8, 2014
  29. Hi. I’m in getting ready to pay off some collections that are on my report. I already know they won’t be removed from my credit report but updated as paid in full. i know the amount of damage collections do to my credit score. My question is by how much of an impact on the credit score having them show paid in full/closed will there be. i read info on how large the negative impact is but i’m not finding any numbers on the positive side. anyone who has any info on that it would be appreciated.

    jacob at 12:31 pm on May 15, 2014
  30. I have the same bill listed under 3 different collection agencies. I can see which is the most current, how do I get the others to take it off, or can they keep it on there?

    melissa at 2:57 pm on July 19, 2014
  31. Mike

    Hi Melissa – This is a great question. For further investigation, I’d recommend you contact our member support team. You can reach them here: https://www.creditkarma.com/about/help

    Thanks!

    Mike at 9:08 am on July 21, 2014
  32. How can i know who is my collector?? I.checked my.credit score.and it shows a.collection but it.doesn’t says from who?

    angel at 4:20 pm on September 18, 2014
  33. Mike

    Good question, Angel. I’d recommend checking out the “collections” tab on your full credit report. You can see that here: https://www.creditkarma.com/myfinances/creditreport#collections

    Mike at 9:12 am on September 19, 2014
  34. My issue is that over a year ago I paid off a collection, two credit reporting agency have it right one doesn’t, I don’t have the letter saying it was paid off. I started talking to the collector in April to get a new letter, they sent me one with the date of April (it had been paid off in May the year before) after 3 months of phone calls (we are now in July) I am told they can’t send me a letter with the correct date, that I have to send a copy of the credit report to them and they will handle it. August 1st or 2nd I emailed it to them, September 1 I was told they had sent the letter to the credit reporting agency. We are now at Sept 30 and it isn’t fixed yet, what do I do? I am getting seriously ticked. This all over a remaining $4 that was paid but the credit reporting agency still shows I owe.

    james at 9:19 am on September 30, 2014
  35. I had a city ticket go into collections. I went to the city and paid the ticket to them instead if the clearin agency. The woman who I paid said that they would contact the collection bureau but in my credit it still states it as derogatory. What do I do.

    Jennifer at 12:22 pm on October 16, 2014
  36. Charmaine

    Hi Jennifer, a paid collections account will still remain on your report as a derogatory mark for up to seven years. If the account isn’t marked as paid, you might want to consider following up with the city and with the collections agency.

    Charmaine at 9:43 am on October 17, 2014

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