How far can a collection agency go to collect a debt…

If the debt that you owe is not satisfied in full or a settlement is reached, a collection agency could possibly garnish your wages, seize your bank accounts, and/or file a lien on your home to satisfy your debt.

The statute of limitations on collecting credit card debt varies by state, but is usually between three and six years. After the statute of limitations on a debt expires, a collection agency cannot sue you in court for the debt. If a collection agency does try to sue you after the statute of limitations expires, you can ask the judge to dismiss the case. However, if a collection agency obtains a judgment against you for the debt, the statute of limitations for collecting the judgment can be longer than the statute of limitations (as much as 10 to 15 years in some states). Plus, the judgment collection statute of limitations is often renewable, which means a collection agency could have decades to pursue you.

Not paying your debts can have a devastating effect on your credit. Late payments remain on your credit reportfor up to seven years. Charge-offs stay on your report for up to 7 1/2 years. Once you miss a payment and it's reported on your credit report, other creditors may take notice and raise your interest rates or lower your credit limit.