THIRD PARTY COLLECTIONS
Third-party collection agencies are in business to collect debts on behalf of others, and represent a wide variety of creditors, such as hospitals, car dealers, and others. Collection agencies specialize in collecting the balance in full from the debtor while trying to avoid litigation. Filing suit against a debtor should be a last resort; a judgment is time-consuming, costly, and often worthless unless executed properly. This can include medical bills and eviction debt.
CHARGE - OFFS
A charge-off or charge off is the declaration by a creditor that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make this declaration at the point of six months without payment. A charge-off is a form of write-off.While a charge-off is considered to be "written off as noncollectable" by the bank, the debt is still legally valid, and remains as such after the fact. The creditor has the right to legally collect the full amount for the time periods permitted by the statutes of limitation based on the location of the bank and where the consumer resides. This form of debt can include student loans.
A section on your credit report is reserved for public records. These are entries that are also on file with a local, county, state, or Federal court. After a serious delinquency, your creditor may take legal action against you. If the court finds in favor of the creditor, the action will become a matter of public record, and in some cases, the action will find it's way to your credit report. Public records that can appear on your credit report include bankruptcy, judgment, or a tax lien.
Typically, creditors report late payments in one of these categories: 30-days late, 60-days late, 90-days late, 120-days late, 150-days late, or charge off (written off as a loss because of severe delinquency). Of course a 90-day late is worse than a 30-day late, but the important thing to understand is that you can recover from a late payment prior to charge-off by getting and staying current with your payments. If however, you continue not to pay your dept and your creditor either charges it off or sends it to a collection agency, it is considered a significant event with regard to your score and will likely have a severe negative impact. Credit history of payments is a large factor in your credit scores.