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Even if you miss just one payment, you are risking the chance of putting yourself deep into debt. Also, your creditor is going to assume that you have broken your agreement with them to pay your responsibility on time.

Your creditor will likely look to work out a payment plan for you before the send your account to a collection agency.

If your creditor is a bank, you need to contact them within 30 days of your delinquency. After 30 days passes, banks have much less flexibility to work a deal with you as a result of regulations.

Banks need to manage their risk and would match rather work with you than have unpaid loans showing on their balance sheets.

Avoiding your creditor is the worst thing you can do. It does not matter if you fell behind as a result of an illness or job loss. Ignoring your debt will only result in the creditor taking aggressive action against you by submitting your account to a collection agency.

But, before your account is sent to collections, your creditor must provide you with a "Mini-Miranda," stating "This is an attempt to collect a debt and any information obtained will be used for that purpose." You will receive this message either by phone, mail or telegram.

An account that has gone to collections will show on your credit report as charged-off or place for collections. Also, when your debt is sold to a collection agency, the original creditor no longer has any ties with the debt. In addition, a new record will show up on your credit report as a debt being paid to a collection agency. Both of these records will remain part of your credit for a minimum of seven years. You must pay this debt ASAP if you want to see it disappear after seven years. Obviously, your credit score is going to be adversely affected if you have an account that goes into collections.

Before allowing your accounts to go to collections, you should contact your creditor to see if you can settle with them.


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