I have a $395 debt with a school for not taking a class within the prescribed start time so they are withdrawing me with a balance due since they did a review of my transcripts. They have sent me a letter threatening to send me to collecitons. I am going to call Monday and try to settle with some type payment plan or should I let it go to colletions? If accounts go to collecitons, does that automatically go on your credit? Does the school have the ability to add this to your credit file as unpaid since they have your SSN? And yes, I do want to protect my credit. Thank for any advice or suggestions.
Once the debt is past due, the school can try to collect the debt themselves or assign/sell it to a collection agency so that they can do so. As part of that process, they can (and probably will) place a collection account on your report. That will definitely be a major negative on your report and reduce your score, probably substantially.
I would call the school and explain your situation, mention any extenuating circumstances and then ask them to reduce the amount you owe and/or work with you on a payment plan. Be polite, and persistent, but if you owe this money, the best way to protect your credit will be to pay it back and prevent any negative remarks from being put on your report.