Falling behind on a bill can happen to anyone, whether it's due to an unexpected expense, job loss, or simply forgetting a due date. But when a bill goes unpaid for too long, the company you owe may send it to a collection agency, which can impact your credit score and lead to persistent calls from debt collectors.
Debt collection is more common than you might think, there are about 6,307 debt collection businesses in the U.S., though the industry has declined by 1.5% between 2019 and 2024.
In this blog, we’ll walk you through everything you need to know about debt collection. We’ll start by breaking down what debt collection agencies do. Then, we’ll explain what happens when a bill goes to a collections agency. You’ll also learn about your legal rights and cover how to handle debt in collections.
Let’s get into it and help you take control of your financial future!
A debt collection agency is a company that collects unpaid debts on behalf of businesses, lenders, or creditors. When you fall behind on payments, usually 90 to 180 days, the company you owe may either hire a collection agency to recover the money or sell your debt to a third party. Not all collection agencies operate the same way.
The image above displays SECS's homepage, which is a third-party debt collection agency.
Now that you know what a debt collection agency is, let’s talk about what actually happens when your bill gets sent to one.
When you miss multiple payments on a bill, usually for 90 to 180 days, the company you owe may send your debt to a collection agency to recover the money. This can have serious consequences for your credit score, finances, and overall financial health. Here is what happens:
Before sending your debt to collections, your creditor will try to contact you through calls, emails, and letters to remind you about the overdue payment. They may also charge late fees or penalty interest on the unpaid balance.
If the debt remains unpaid, your creditor may hire a third-party debt collection agency to recover the money or sell your debt to a company that collects overdue accounts.
Agencies like SECS work directly with businesses to recover outstanding balances while following ethical and legal standards.
Once a collection agency takes over, they will begin reaching out via calls, emails, or letters to request payment. Under the Fair Debt Collection Practices Act (FDCPA), they must follow strict rules and cannot harass, threaten, or mislead you.
Once your debt is reported to the credit bureaus, it can significantly lower your credit score and remain on your report for up to seven years. This can make it harder to get approved for loans, credit cards, or even rental applications.
If the debt remains unpaid and is large enough, the collection agency or original creditor may take legal action, which could result in a court judgment, wage garnishment, or a lien on your property.
Just because your debt is in collections doesn’t mean collectors can do whatever they want. Here’s what the law says about your rights.
If your unpaid debt is sent to a collection agency, you still have rights under the FDCPA. These laws protect you from harassment, deception, and unfair collection tactics. Use the following key points:
Protecting yourself from unfair collection practices is essential, but taking steps to keep your debt out of collections can save you stress and money.
Keeping your debt out of collections is crucial to avoiding extra fees, protecting your credit score, and steering clear of the stress that comes with collection calls. Here is what you can do to stay in control of your finances:
If you're struggling to make a payment, don’t ignore the problem, contact your creditor as soon as possible.
Even if your debt has been sent to collections, you still have options to resolve it. Some agencies allow you to set up a payment plan or negotiate a settlement to pay a reduced amount.
Agencies like SECS work with individuals to find fair solutions while following legal guidelines. SECS offers flexible payment plans tailored to your financial situation. You can:
One of the easiest ways to avoid collections is by making timely payments.
Pro Tip: SECS takes a digital-first approach, using text and email to keep you updated on your account. This means fewer phone calls and more convenient reminders and payment confirmations, so you never miss an important update.
If you’re struggling to keep up, don’t be afraid to negotiate with your creditor.
If you're juggling multiple debts with high interest rates, consolidating them into a single loan with a lower interest rate can help simplify payments. This can make it easier to stay on track and reduce your risk of missing payments.
Pro Tip: Make sure the new loan terms actually improve your situation—lower interest and better repayment terms should be your priority.
As explained in this blog, addressing your debt early, knowing your rights, and creating a financial plan can help you manage or even prevent collections. What happens when a bill goes to a collection agency depends on how you handle the situation, but taking action quickly can minimize the impact on your credit and finances.
Companies like SECS believe in a fair and respectful approach to debt recovery. Instead of seeing collections as just a transaction, they focus on helping consumers find solutions that work for their unique situations.
If you're dealing with a debt in collections, SECS offers flexible and convenient payment options to help you regain control of your financial future.
Contact SECS to explore solutions that fit your needs and start your journey toward financial stability!
This communication is from a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.
.jpg)