Debt that is owed to creditors may be sent to a collection agency if attempts by the original creditor to obtain payments have failed. Ohio residents who are concerned about debt that has been referred to a collection agency should know that collection accounts can have a negative impact on their credit scores.

If consumers pay what they owe in full or settle for a lower amount, the collection accounts on the credit reports will be marked as paid. However, like other negative marks on one’s credit report, the account can remain on their report for up to seven years and 180 days after the account delinquent, which is generally designated as the first late payment with the original creditor.

Even after an account has been removed from a credit report, collections agencies are able to attempt to collect payments if the account is still within the statute of limitations. The statute of limitations or how long creditors can try to collect certain debts will depend on the state in which the consumer resides.

The removal of a collection account from a credit report can improve one’s credit score and aid in obtaining new loans or credit. However, there are exceptions to the timeline and times when a collection account will not affect a consumer’s credit score. This includes instances in which there was no contractual agreement to pay the debt or the account was for a medical bill that was paid by insurance.

An attorney may assist individuals who have significant debt with determining whether Chapter 13 bankruptcy is appropriate for their financial situation. Chapter 13 may be recommended as a form of debt relief that may stop creditor harassment, create manageable payments, stop foreclosure or reduce interest payments.