Managing Debt

A Debt Collector Came After Me for $8.97

Comments 9 Comments

A Debt Collector Came After Me for $8.97We recently received a question from a reader who is looking for help with a past due movie rental that went to collections:

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

The debt collection industry has grown into a multi-billion dollar business, and in order to stay competitive and profitable, collection companies are buying collection account portfolios from almost any company that’s willing to sell them or commission them to collect on their behalf. This includes credit card issuers, auto and mortgage lenders, cell phone companies, utility companies (cable, Internet, water, etc.), public libraries, gyms — and even video stores, as evidenced in your case.

A few years ago, these types of low dollar collections made headlines when a number of people began receiving collections for old, unpaid library fines that had been turned over to collections and reported in their credit reports. Yes, even minor past-due debts can turn into collections, regardless of how minor the amount. It’s something we should all be aware of.

If you find that you owe a small debt that seems trivial or insignificant and you’re on the fence about paying, it’s better to pay it than risk the chance of it turning into a collection and potentially hurting your credit down the road. No one wants to deal with the hassle of a collection, and it’s important to remember that a forgotten movie rental can happen to any of us.

Will a $9 Collection Hurt Your Credit?

The short answer here is: It depends. If the collection agency reports the collection to the credit bureaus, the answer is, yes, it will most likely have a significant impact and hurt your credit score. 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. (If you’re worried about how a collection could be impacting your credit, you can check your credit score using a free tool like’s Credit Report Card, which gives you your score plus a breakdown of the major components of your credit score – payment history, credit usage, length of credit history, mix of credit and new credit – to see what areas you need to work on. You can then do a deeper dive by checking your three major credit reports, which you can get for free every year.)

Exceptions to the Rule: FICO8 & VantageScore 3.0

In late 2008/early 2009, FICO made several significant updates to the FICO credit score model, including how low dollar collections were factored in the score calculation. In the FICO8 model, collection accounts less than $100 are excluded from the calculation. This means an $8 collection would have no impact on your credit score. It’s important to understand that this is only the case with the FICO8 version of the FICO score. And although lender adoption of FICO8 continues to grow, many lenders are still using older versions of the model. You also have to consider that some lenders may not use the FICO score at all — many do, but some do not.

Some lenders may use VantageScore 3.0, the newest version of the VantageScore model. This model doesn’t factor in any collection accounts that have been paid or settled. So, if you pay the $9 collection account, it won’t impact your new VantageScore 3.0.

How to Respond to a Collection Letter

If you receive a collection letter in the mail, it’s important that you address the collection as quickly as possible. If you think the debt might not be yours or you don’t agree that you owe the debt, you only have 30 days to dispute the collection and request that the debt be validated.

If the collector is unable to validate the debt by providing written proof that the debt belongs to you and that you do in fact owe it, they have no grounds for pursuing the collection and must stop all further collection attempts. If they don’t, they will be in direct violation of the Fair Debt Collection Practices Act.

If the debt is valid and you owe it, it’s best to pay it. For higher dollar collections, we’d normally suggest negotiating a settlement over paying the full amount, but there’s not much room for negotiation with an $8 debt.

It would be worth contacting the collection company directly to find out if they plan to report the collection. Order copies of your credit reports from to confirm whether or not the collection has been reported yet. You can also monitor your credit score every month to ensure it isn’t reported using the free Credit Report Card. If the collection agency has not yet reported the collection, it may be in your best interest to go ahead and pay the $8 rather than going through the hassle of disputing or validating the debt.

For more on Debt Collection:

Image: Hemera

  • Pingback: | Movie Horror: A Debt Collector Came After Me for $8.97

  • Pingback: Movie Horror: A Debt Collector Came After Me for $8.97 | Financial News One

  • Pingback: Is Your Cellphone Ruining Your Credit? « Jeanne Kelly Credit Coach

  • Maggie

    This article makes me feel slightly less guilty that we dumped family video and started using Netflix.

  • John

    A friend of mine ended up owing the IRS $14.97. She got two letters threatening her that they were going to throw her in jail, garnish her wages, and ruin her (I saw the letters). Yet Timothy Geithner, who owed the IRS over $10,000, was made head of the IRS. It ended up being a mistake on their part. No apology.

  • Charles Piercey

    Ridiculous. A 3rd party collections agency has the responsibility to show proof of the debt. To say that the onus is on the person they are calling or writing to dispute the debt is contrary to the Law. Otherwise, any idiot with a computer could send out collections letters and you would spend your life disputing the silliness.

    • Deanna Templeton

      I understand where you’re coming from but just because there are laws in place under the FDCPA doesn’t mean that collectors don’t break them. The problem is that there are cases where collectors aren’t able to show (or don’t have) that proof. And if a consumer doesn’t dispute the collection or request them to validate the debt (with proof), they’d never know. The law does require a collector to show proof of the debt, and the collector is responsible for providing this proof — but only if the person they are calling or writing to requests the proof.

  • Chuck

    Just do what I did. I told them I would pay in person and showed up with a bat and told them the next time I got a call I would know where to find them. Problem solved. Stinking gangsters.

  • dpavlako

    Not very good advice at all.

    First off, collection agencies will do and say whatever they can to separate you from your money. If you ask them if they will report the debt to the credit bureaus, of course they will tell you “yes”. Even if they tell you no, the will do it anyway. All they want is the money. Period – nothing else. They are not your friends, they are not there to “help you”, they are not anything but debt collectors, and will do whatever it takes.

    the ONLY way to handle this is to offer to pay the debt in full immediately AFTER you receive a letter from them (on their letterhead)that states who the original creditor is, that upon receipt of the funds from you (which your verification of their receipt will be the certified mail return receipt that they have signed) that they agree to:

    1. NEVER report this debt (or any derivation thereof) to ANY credit bureau or credit reporting agency.

    2. If it has been reported, to IMMEDIATELY remove the report from any and all credit reports – not just mark it paid, but REMOVE ANY REFERENCE OF IT (the DO have the ability to do this).

    3. If it has been reported, to IMMEDIATELY remove the report from any and all credit reports – not just mark it paid, but REMOVE ANY REFERENCE OF IT (the DO have the ability to do this).

    4. If it has been reported by the ORIGINAL creditor, to IMMEDIATELY remove that report from any and all credit reports – not just mark it paid, but REMOVE ANY REFERENCE OF IT (they also have the ability to do this, as the owner of that debt).

    5. That after they have done 1-4 and you have paid the debt, that they will never, in any form, contact you again or access your credit reports.

    After you have this letter (sent to you by certified mail – insist on this) agreeing to the above terms, on their letterhead, signed by someone who has the authority to agree to those terms and is verifiable, then you make the payment.

    Now, regarding making the payment, DO NOT UNDER ANY CIRCUMSTANCES EVER, EVER, EVER give them a personal check (they will then have access to your checking account and can take what they want from it), give them credit card info (same reason), debit card info (same reason) or anything else that can give them access to your finances. SEND THEM A MONEY ORDER FROM THE POST OFFICE, AND SEND IT CERTIFIED MAIL TO THE PERSON WHO SIGNED THE LETTER THAT YOU SHOULD NOW HAVE WHERE THEY AGREE TO YOUR TERMS, WITH RETURN RECEIPT! Also include a copy of the letter from them that they sent to you where they acknowledge agreement to the terms that you set forth.

    Yes, all of this will cost you as much as the $8.00 debt, but there is a reason for doing it this way. When they report the derogatory debt to the credit bureaus, you will at least have the amunition you need to show that you have paid the debt and that in return for you paying it, that they agreed to remove it – not just mark it as paid. Removing it will help your score. Marking it as paid still shows it as a derogatory item and will hurt your score, so the effort to do all this is worth a little more than 8 bucks.

  • Rich

    I changed car ins and asked for my old policy to be cancelled. It never was but I was pestered for future premiums saying they were sending it to collection rather than cancelling. I talked with them, mailed a copy of my new policy and they readjusted and sent me a refund. In Indiana you cannot just cancel for non-payment.

  • Dean Johnston

    Redbox is a dollar. Hollywood charged 5x that amount, and the fees were ridiculous. Greed made those companies go out of business.

  • Credit Experts

    The collection agency must verify the debt, in writing. It can pay to proceed carefully to be sure that the debt is actually yours. Here’s a little about your rights and how you should respond to the collector:
    The Ultimate Guide to Debt Collection.

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now

Stay connected to our experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.