When you don't or can't pay your bills on time, your creditors have the option of turning the debt collection task over to a collection agency. The amount of time that your creditor waits before sending the debt to collection is solely at the creditor's discretion. Most often, creditors do wait 3 to 4 months, but this is not required and they can turn a bill over to collection as early as they wish to. Many people believe that as long as they pay something each month, even if it is a very small amount, the account will not be turned over to the collection agency. This is simply not true. As long as there is any outstanding amount owed, your creditor is within his rights to pursue collection.

If your account is turned over to a collection agency, you will no longer be dealing with the original creditor. All communications and any payments made must be directed to the collection agency. If you have ever dealt with a collection agency before, you know that they can be persistent almost to the point of harrassment, however, collection agencies are required by federal law to follow certain guidelines in the collections activities. For your own protection, it's important to know the following rules:

• A collection agency my not harass you by calling you repeatedly or before 8 AM or after 9 PM.
  
  
• A collection agency cannot call you at your place of employment if they are informed that the employer doesn't allow such calls
  
  
• A collection agency representative cannot abusive or obscene language in their contacts with you.
  
  
• You have your right to privacy and a collection agency cannot breach that right by divulging information about you or your debts, or publishing your name on a list of "non-payers".

It's always best to repay your debts as soon as possible. If you are having serious financial problems, be honest and tell the collector that you cannot pay the bill now or can only make small payments. It is better to make small payments then to not attempt payment at all and while being turned over to a collection agency is damaging to your credit report, it is more so to see a complete "non-payment" of a collection account on your credit report.

It's possible that you may be able to negotiate with the collection agency. They could offer to accept less than the total amount owed to satisfy the debt. Usually, they will do this only under certain conditions, such as payment in full in a very short time. Remember, though, that if you are under extreme financial stress, it's not always wise to pay one debt by borrowing elsewhere.

The best way to avoid dealing with collection agencies is to pay all your bills on time. This isn't always possible and your options are limited. Before the account is turned over to collections, call your creditor, explain your situation and offer a payment plan. They might just accept a plan, or offer a plan of their own. If you can avoid collections, do. Your credit report will thank you.