Let’s face it. Being in debt stinks. Nobody likes to owe money. The pressure when you fall past due on your bills is huge. This coupled with the threat of disconnecting utilities/services, the potential loss of property or the risk of added legal expenses can create the feeling of a downward spiral for just about anyone.
We know paying a collection agency is not just painful because you have to part with your money. Often, the service or product was consumed or used months ago. So, you must decide, “Do I pay the prior past-due balances, or do I pay my current bills”?
There are important pros to paying off your debt. Here are 5 key reasons you should consider paying collection agencies:
- Stop collection calls
If you owe money, collection agencies will attempt to recover unpaid balances. These calls can be annoying, stressful and occur during inconvenient times. When you pay off your debt, these calls will stop.
- Protect your credit score
Unpaid bills will impact your credit score. Your balance will be reported to the credit bureaus who keep track of consumer credit and financial risk. According to Credit.Com, just one collection account can cause a good credit score to drop 50 to 100 points. Imagine what happens when multiple invoices are left unpaid!
- Improve ability to qualify for a loan
You may not need one now, but in the next few years, you may need a loan to buy a car or purchase a home. Or you may need to qualify for a credit card to help manage your expenses. Any unpaid balance will remain on your credit report for up to seven years. By keeping up with your payments, your credit score will improve. This increases your opportunity to qualify for a loan.
It is worth noting that for some jobs, employers may elect not hire you if there are unpaid debts on your credit report. And, many landlords can reject an application for an apartment lease if you are viewed as high risk.
- Avoid being sued
A lawsuit is painful for both sides. It is not likely that debt collectors will sue you over a small balance. But keep in mind, if there is a debt to be collected within the statute of limitations, the collectors have the right to sue you for the monies owed.
Prevent being sued to avoid tarnishing your record or having your wages garnished.
- Peace of Mind
There is no sense battling the collection agencies or fighting them for valid fees that are owed. Take care of your debts as you can afford to and you can sleep better at night.
Another way to enhance your peace of mind is to register for the Contact Defender “National Preference Center”. Here you can notify agencies of the best day, time and phone number to contact you to negotiate payment arrangements at your convenience. Take back control and get back on