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When Should You Pay Off A Collector

I believe we have all had this happen to us; you’re sitting at home minding your own business when suddenly your phone rings. Its a number you do not recognize. You answer the phone and are connected through to an agent that informs you that you have an outstanding account that needs to be resolved immediately. Now this can be an intimidating call to receive, if you were not expecting it, but it doesn’t have to be if you pay in full as soon as possible. In this article I will give my opinion on the 3 most important reasons to pay off an account at the time of first contact.

First and foremost is how a delinquent account can impact your credit score. I have been asked many times by friends and family “What exactly is a good credit score?”. In Canada the minimum score to be considered “prime” credit, is over 700, this should be the number you are always aiming to be above. Outstanding R9/O9/I9 items on your credit bureau will drastically impact this number. Your credit score can impact a variety of factors in your life outside of your ability to secure financing and credit products; it is already common practice to require a credit check while applying to rent a new apartment, or for a new job. Now for the good news, most third-party collection agencies in Canada will not post an item to your credit bureau until 30 days after they have received it. This gives you a window in which to pay off your delinquent account before it has an opportunity to impact your credit in a negative way.

Secondly it is the only way to get the collection agency to stop contacting you, whether that is via telephone, text, email, or mail. I have worked in collections, both in a first party as well as third party capacity for many years. I have heard just about every excuse why an account in arrears can’t be paid.

Now I am not saying that these people do not intend to resolve their accounts, they are simply trying to buy time until they feel like they are at a point they can comfortably make the payment. Unfortunately, most third-party agencies are uninterested in how comfortable the payment is for you. They are simply trying to close the account so they can report to the original creditor that the account has been paid in full. You must be prepared to receive calls, emails, and texts every single day until you do resolve the account, should you decide to not handle the account at the time of first contact. Now I don’t know about you but I prefer my phone to only be ringing when it is someone I love (or at the very least like) and want to talk to, not a collector. The only foolproof way to stop the calls is to pay the account if not at the time of first contact, then by your next pay period.

Lastly and most importantly, at least for me, is the peace of mind I receive knowing that it is resolved. Financial stress can impact nearly every part of your life, in ways you don’t even realize. Like any form of stress, it can lead to sleep loss, anxiety and depression. As well as a variety of other mental
and physical ailments. With that being said, the amount of time you carry that stress with you, is ultimately up to you. I get a feeling of relief when taking care of a delinquent account, can only be explained as the feeling of my first cup of coffee in the morning. Relieving stress in your life has many
different health benefits. Not the least of which are: lower blood pressure, lowering fatigue, and  boosting confidence to handle problems. So, if you’re finding yourself stressed out by your financial situation, promptly paying off your creditors in full is a sure-fire way to relieve that stress.

In closing the only person who can decide when to resolve your outstanding accounts is you. The only person who can decide the speed at which to handle your debt is you. As someone who has helped a variety of clients, at varying levels of delinquency, I must advise you to always pay off any credit item when first contacted by an agent. You have the power to change your financial future, and it starts with paying off debt as soon as possible. It starts today.

Written by David Yates

Branch Captain with 8+ years experience in collections and credit analysis.

More Articles by David Yates

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