What does Collection mean?

The banking term collection is a presentment of a draft or check for payment, and, consequently, receipt of its total as a credit entry or in cash.

Another explanation for collection is, that it is a transfer of past due or delinquent accounts to either a collection agency or a specific place set up for this exact purpose, for partial or possibly full recovery of the debt. If a consumer has a debt that was registered by the collections department, and has shown up on a credit report, he or she might find it difficult to get a loan at a reasonable rate. The more severe the debt the more unlikely it is for someone with a bad credit report to borrow from loaners.