Do You Have to Pay Debt Collectors

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Key takeaways

If you don’t pay your credit card bill, your creditor will eventually sell your account to a debt collection agency.
Most collectors will negotiate a settlement for a reduced amount.
If you don’t want to pay, you can wait for the statute of limitations to expire or dispute the debt.

Do you really have to pay your credit card bill? If you don’t pay, your creditor will eventually sell your debt to a collection agency. When this happens, the debt doesn’t disappear. It remains yours to pay. Only now, you owe money to a collector instead of your creditor.

Millions of Americans find themselves dealing with debt collectors every year. Ignoring collectors won’t make them go away. The phone calls will continue and they may take you to court. Find out what you can do and if you really need to pay.

What is credit card debt?

Credit card debt refers to the outstanding balance you owe on your credit card. You incur credit card debt when you use your card to make purchases or withdraw cash and then fail to pay your balance in full by the due date. When you don’t pay in full, you accrue interest on the outstanding amount. If you don’t make the minimum payment on time, you’ll be charged late fees. The interest and fees will add up and cause your debt to grow.

When you can’t pay credit card debt for over 30 days, your account is considered delinquent. At this point, the credit card debt collection process begins. Your creditor will first attempt to collect the balance and get you back on track. After 90 to 180 days of nonpayment, they may send it to collections without notice. Being sent to collections means the collection agency now owns the debt. Your creditor will report this to the credit bureaus, adding a negative mark to your credit report.

What is a debt collection agency?

A credit card debt collection agency or debt buyer is a company that collects unpaid debts for profit. Some agencies work on behalf of creditors. Others are debt buyers who purchase unpaid accounts for a fraction of their value.

How do collection agencies work?

If your debt was sold to a collection agency, they may attempt to contact you through phone calls, emails, or letters to demand payment. While debt collectors can come to your house without notice, these instances are rare. Most communication is done remotely. They may also report the delinquent account to the credit bureaus or take you to court. Their goal is to persuade you to pay any way they can.

What happens when a bill goes to collections?

When a bill is sent to collections or if a collection agency buys your debt, the first thing it must do is send you a written debt validation letter. Federal law requires them to send the letter within five days of initial contact. It must provide details – the amount owed, the name of the original creditor, and how to dispute it.

The agency will then contact you. Collectors are known for being aggressive in their attempts to collect payment.

If you do not pay, the account may be sold to another collection agency. The new agency may restart the collection efforts with more aggressive tactics, including lawsuits and wage garnishments.

What can credit card debt collectors do?

Specific laws govern the credit card collection process. Collectors must follow the Fair Debt Collection Practices Act (FDCPA). The FDCPA protects consumers from abusive collection tactics. Under this law, collectors cannot harass or abuse you, make misleading statements or threats, or contact you at unreasonable hours.

The FDCPA also gives you the right to dispute debt collection within 30 days of receiving a collection notice.

If you did not receive a validation letter, the FDCPA gives you the right to request one. Do debt validation letters really work? Yes, they work in your favor because they force the collection agency to prove you owe the money.

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Do you have to pay debt collectors?

When you open your mailbox and find a collection notice, your first thought may be, “Do I have to pay debt collectors?” The short answer is yes. You are still responsible for the money owed. But should you pay off collections? Before you rush to pay, confirm that the delinquent debt is valid and within the statute of limitations.

The next question is, “Should I pay the debt collector or the original creditor?” If your account has been legally sold, you must pay the collector. Check that they have the legal right to collect.

What happens if you don’t pay a debt collector?

Ignoring a collector won’t make them disappear. Collectors will continue to call, report the unpaid account to the credit bureaus, or even sell it to another agency. Your score will continue to drop, making it hard to qualify for new loans or credit cards.

A debt collector can sue you, too, if nothing else is working. If they win a judgment, they may be able to garnish your wages or freeze your bank account. It’s important to explore repayment or settlement options before it reaches this stage.

How long can a debt collector legally pursue old debt?

Collectors can attempt to collect indefinitely, but the statute of limitations sets a time limit on when they can take legal action. Each state has a statute of limitations on debt. Most put it at three to six years, but a few outliers exist. Once the statute expires, they can no longer legally compel you to pay. That does not mean they’ll stop trying to collect.

How to pay off collections

First, confirm that you owe the money. Next, check the statute of limitations in your state. Once you’ve confirmed that you legally must pay, it’s time to figure out what you can afford. Most collectors are happy to negotiate credit card debt.

How much will a debt collector settle for?

Collection agencies typically buy debts for pennies on the dollar. They will still make a profit even if you don’t pay the full amount.

You can negotiate an affordable payment plan or reduced lump-sum payment. Often, you can reach a debt settlement for 30% to 50% of the total amount owed. Some collectors may accept even less.

When you know how much you want to pay, it’s time to make an offer. To find out who to call to pay off collections, check your validation letter, which should include their contact information.

Whatever you do, get the agreement in writing before sending money. Confirm they will report the account as “settled’’ for “paid as agreed’’ to the credit bureaus.

Knowing how to settle with a debt collector can prevent you from being pressured into paying more than you can afford.

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How to pay off debt in collections online

Many agencies offer online payment portals where you can settle your balance. They typically accept multiple forms of payment. You can use a personal check, money order, ACH or electronic transfer, debit, or prepaid cards. Paying a collection agency with a credit card is not the best option. They may report it to the credit bureaus, and if you can’t pay off the balance, you’ll end up where you started.

What to do if you’re struggling

If you cannot afford to pay, it’s time to get help. The best debt relief options will help you repay what you owe efficiently and for less with minimal damage to your score.

Nonprofit credit counseling agencies offer debt management plans (DMPs) that consolidate your bills into one. You make one affordable monthly payment at a reduced interest rate. If your credit score is decent, you may be able to secure a debt consolidation loan. A loan can help you pay off credit card balances at a lower interest rate.

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How to get rid of debt collectors without paying

We’ve already gone over what happens if you don’t pay collections – damage to your credit, lawsuits, etc. That said, you do have a few legal options. Here’s how to get out of paying debt collectors legally.

Check the statute of limitations

If the statute of limitations on credit card debt has passed, the collector can no longer legally compel you to pay. While you still owe the money, it is effectively uncollectable.

Always check the statute before engaging with collectors. Be careful since certain actions, like acknowledging the account or making a payment, will restart the clock. The good news is that disputing a debt does not restart the statute of limitations.

Send a dispute letter to the collection agency

You can dispute a debt if it was sold to a collection agency, and it’s a good idea to do so before you pay. You can dispute collections if the account is inaccurate, not owed by you, or already paid. Send the collection agency a written letter disputing collections within 30 days of first contact.

In this letter, you should state that you are disputing the debt’s validity. Request that the collection agency prove you owe the money. Ask for details about the original creditor, the amount owed, and the date the debt was incurred.

Once the collection agency receives your written dispute, they must cease all collection efforts until they provide you with the requested information.

Frequently asked questions

1. How much do debt collectors pay for debt?

Collectors typically buy accounts for 4% to 10% of the original balance. Older or harder-to-collect debts may be sold for even less.

2. Can you negotiate with debt collectors?

You can often negotiate a reduced payment. Always get agreements in writing.

3. Can a collection agency report to a credit bureau without notifying you?

Collectors can report to the credit bureaus without prior notice, but they must notify you afterward.

4. If I settle with a collection agency, will it hurt my credit?

Settling will not hurt your credit. Your credit has already been damaged due to missed payments and the collection note on your credit report. While it will not remove the negative mark, it is better to settle than to leave the account unpaid.

5. Can debt collectors charge interest?

Collectors can charge interest if it is allowed by your original agreement or state laws. Excessive interest may violate consumer protection laws.

6. Can a collection agency sue you after seven years?

In most states, the statute of limitations is three to six years. After this period has passed, the collection agency cannot sue you. Certain states have statutes of limitations up to fifteen years, and you can always restart the clock.

7. Is it illegal for a collection agency to buy your debt and come after you?

It is legal for agencies to buy and collect debt. They must follow the Fair Debt Collection Practices Act (FDCPA) when attempting to collect.

Bottom line

When your credit card debt is sold off to collections, it’s tempting not to pay it. The trouble is, ignoring the bill won’t make it disappear. Nor will it change the fact that you owe the money. You’ll simply have to deal with relentless calls from collectors, serious damage to your credit, and you may be sued. If the collectors win a lawsuit, they may be able to garnish your wages or even freeze your bank account.

Your best option is to pay the money before it reaches collections. Call your creditors and get on a payment plan. Work with a credit counselor. Take out a consolidation loan. Find a way to pay off what you owe.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

Do You Have to Pay Credit Card Debt That’s Been Sold to a Collector?

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