It is perhaps the goal of every person to have a good credit rating. Unfortunately, collection accounts taint the credit reports and this ultimately affects your credit rating.

Once a past due account becomes considered a collection account, the creditor informs credit bureaus such as Equifax, Transunion and Experian, about this so it can be reflected on your credit report.

The reasons why a past due account can eventually become a collection account differs from one person to the next. It could be that the failure to pay in due time is because of job retrenchment, death, or something else. Needless to say, when your account is already considered a collection account, your credit rating automatically downgrades.

There is a need for you, then, to restore your credit standing, and this can be done by paying off the account so it gets deleted from your credit report. The collecting agency may not immediately take the collection account off your record, but there is a strong possibility that it will in time with a dispute letter.

A collection account that is beyond seven years must be deleted, and you can do so by writing dispute letters to the three main credit bureaus, Equifax, Transunion and Experian.

These days, it’s becoming more and more difficult for people to pay their bills. It seems that when people borrow money, they tend to forget their obligations. Maybe it is only because of the global economic crisis that is really crippling people. Then again, even if it is, more severe actions should be done by the lenders under this circumstance.

Before, the most stringent measure a lender could do to their borrowers who had past due accounts would be to refer the matter to a collection agency and then maybe just post some negative feedback on the borrower's credit record. Considering the difficult times however, something more severe should be imposed to recover the debt.

Such being the case, you can expect collection agencies to go a step further in recovering the outstanding debt. It is very possible for them to file a lawsuit against those who have failed to meet their obligations on time. If you get a letter from a collection agency demanding you to make payment within a certain period of time, that should already give you a clue that the collection agency is, indeed, preparing to file a lawsuit against you in the event that you still fail to make the necessary payments.

Just because a past due account has already been referred to a collection agency does not give that agency liberty to do anything it wants. Certainly, there are things that a collection agency cannot do. For one thing, it cannot and should not contact a borrower at his place of work, and must never use abusive language or threaten the borrower in any way.

Sure the agency may inform the borrower that it is planning to sue him for failure to pay the debt in due time, but if there is no actual move by the collection agency to do so, then that can constitute as harassment, and the borrower has the right to make the necessary complaint against the agency.

The borrower, too, can request the collecting agency to cease calling them especially if there is already harassment and the use of foul and threatening language. If it does not heed to his request, he can approach the Federal Trade Commission (FTC) to make a formal complaint.

In the event that a lawsuit will, indeed, be filed, the FDCPA requires that the filing be done at a court that is close to the borrower’s locality, or at least within three hours drive only.