Since 2016, the Australian collections industry has seen an average growth of 2%. This means that some Australians are struggling to pay their bills on time in some cases, at all in others. If you’re a financially responsible person, you’re going to find a way to pay your outstanding bills. When the debt becomes over a year old and it’s in the hands of a collection agency, the picture gets a little blurry.
There are times when you should never pay a collection agency.
Collection agencies purchase debt. To recover their funds, they attempt to collect them from the individual. Paying a collection agency gets them to stop calling you and mailing you notices. The action doesn’t erase that you didn’t pay off your debt with the original creditor.
It takes seven years for a failure to pay a debt to come off your credit report. It takes the same amount of time even if you pay the collection agency. If the debt is over a year old, it also goes against you.
A credit report should remain silent. The more inquiries are made, the more it goes against you. Using online calculators, such as our car loan calculator, helps you prepare for the application; it minimises the hits on your credit report.
Never Pay a Collection Agency Conclusion
It sounds counterintuitive, but if your debt is at least a year old, don’t pay a collection agency. There are laws on the books that protect consumers against harassment by collection agencies. So, you need to figure out how to dodge their calls and notices. If you’re approaching financial hardship, a refinance or consolidation of debt might be a solid solution. For more information, contact our Mortgage House loan specialists.
