This comes from inside experience. I recently started working at a debt collections agency. In the short time since I've started working there I've had many consumers tell me they already paid their debt to the company. Now, normally we're inclined to believe this is bull shit because people lie about this all of the time, but every now and then we get someone that's telling them the truth.

Now the company I work for services smaller to medium sized businesses. What people don't realize is, when a debt has gone into collections the company has essentially given control of that debt to the collections agency by one of two means: either by selling the debt to the company or by entering into a contract with the company where the collector takes a percentage of the debt that's actually collected.

Now what happens next and what people don't seem to realize is everything is going to go through that collections agency. It's the collections agency that handles all of the reporting to the credit bureaus as well. Another fun fact: you don't need to have given the company your social security number we can legally find that out in order to report it to the credit bureaus by skip tracing.

Anyways back on track, when you pay the business that you originally had the debt with you are depending on that company to efficiently let the collections agency know that they were paid. I've been seeing it a lot where for whatever reason, the company didn't notify us and update records on our end that they were paid even though they are instructed to. A lot of times these are smaller businesses where the person dealing with us also has a normal job within their company that isn't dealing with us. Many times it's really because the person mailed in the check to some address that they thought would be good. What then happens is the collections company never finds out you paid them until a person calls angry that it's on their credit report 6 months later. Well the letters we send out are so specific on how to pay that there really isn't much that would hold up in court if you decided to waste money on the law suit route. The industry is also tightly regulated so trust me, if you know you owe the debt pay the collections company.

On the flip side, If you want to dispute the debt call the collections company as well, once it's in collections, calling the original company the debt was with is pretty useless and they're supposed to tell you and usually do to tell you to call the collections company. Another pro tip: you can tell us to stop calling you all you want to, and we will (at least my company) do just that. But saying to stop calling doesn't mean dispute. So two years later, when you call up saying you were never notified, and I look at all of my records (we literally record everything) and see that two years ago you didn't bother to say anything besides stop calling me, I'll just think you're dumb that you're just now mad this is on your credit report because you need a mortgage.

I will add a caveat that if the letter from the collector tells you to pay the original business, do that. My company actually does this for the first few months before we start calling you and asking you to pay us. I'll also say that really, don't let your debts hit collections.