Definition
A debt handed to or bought by a collection agency after the original lender gave up, appearing as its own entry on your credit report. It can remain for up to seven years from the original missed payment.
Why it matters
Collections drag scores and invite calls, but you have rights: collectors must validate the debt on request, and very old debts may be past the statute of limitations for lawsuits. Paying can stop the pressure, though the entry's history remains until it ages off.
Example
A forgotten $900 final utility bill surfaces as a collections account. The consumer requests written validation, confirms the debt is genuinely theirs, and negotiates payment. The calls stop, and the entry ages off the report over time.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.