Saturday, April 27, 2013

Debt collector $8.97: Woman receives letter in the mail for $8.97 debt

Debt collector $8.97: Woman receives letter in the mail for $8.97 debt, When a woman received a letter from a debt collecting agency for an $8.97 debt, she began to wonder if it would hurt her credit score. Seeking an answer to her question, she wrote Credit.com’s Deanna Templeton the following message,

Via a MSN Money report dated April 26: Today I received a letter in the mail from a collection agency stating that a DVD I rented from Family Video (probably 5 years ago) has gone to collections. The total that I owe is $8.97. Am I going to get a bad credit score for an unpaid bill of $8.97?! Help would be greatly appreciated.

-- Jillian

Templeton explained to the concerned woman that even a small $8.97 debt can do damage to her credit rating. She went on to say, that if left unpaid, small debts such as unpaid library fines can turn into something much worse in the future.

“When it comes to collection accounts, the amount of the collection has no direct impact on your credit score. It’s the fact that the account made it to collection status that matters. This means a collection of $8 is just as damaging as a collection of $5,000 — with two exceptions," Templeton said.

According to the report, if you receive a collection letter in the mail, it’s best to address it right away because you only have 30 days to dispute the claim.

The debt collection industry has been experiencing tremendous growth recently, a research firm said, with an increase of 3.9% to $12.2 billion in 2011.

Richard Cordray, the head of the U.S. Consumer Financial Protection Bureau, said that “nearly one out of every 10 Americans” have debts totaling more than $1,500 in damage.

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