Should You Work With Debt Collectors or Your Original Creditor?

When debt collectors come calling, it’s time to settle up. Once an unpaid debt is sent to collections, it can be damaging to your credit if you don’t take care of it right away. Collections agencies — while not ideal — are not out to get you or financially ruin you, and they will often work with you on a payment plan to accommodate your financial needs.

However, there are situations where it can benefit you to try to work with the original creditor. But before you do that, it’s important to know when it makes sense (and when it doesn’t), as well as how to do it and how the situation can affect your credit history.

When do creditors contact collections agencies?

Creditors typically send an outstanding debt to a collections agency after several months have passed since you made a payment (or since the debt was initially made) — and they have made numerous attempts to reach you but couldn’t.

When should I try to work with the original lender instead of the debt collector?

You’ll typically have the best luck working with the original creditor if you contact them within six months of your debt being sent to a collector. After that, the creditor will have taken additional expenses and can’t reclaim the debt as easily (nor will they want to).

If it’s within six months, call the creditor’s customer service number and ask if they’ll give you the option to pay off the full balance — or if they’ll set up a payment plan for you. Approach the conversation with a friendly, polite tone, and if you’re asking for a payment plan, make sure you have a good reason why. Be prepared that you may not get the answer you’re looking for. If the creditor isn’t willing to work with you, then you can ask the debt collector to set up a payment plan for you, if needed.

How will debt collection affect my credit?

Having any debt sent to collections can damage your credit score. It can help if you pay the debt off quickly — but even then, a paid collection account can remain on your credit history for up to seven years, so it’s best to make sure you’re always up-to-date with your bills. If you find yourself in a situation where making a payment is not possible, call your lender right away and ask for leniency. Most likely they’ll be willing to work with you, as it benefits them as well.