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What Happens if You Don’t Pay a Collection Agency?

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In a Nutshell

If you don't pay a debt collector or collection agency, you’ll likely face increasing efforts to collect the debt via phone calls, letters, or even social media contact. Not paying a debt in collections will also hurt your credit score. If you don’t pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.

Written by Your Upsolve TeamLegally reviewed by Attorney Paige Hooper
Updated August 17, 2023

Is It Okay To Ignore a Debt Collector? 

In most cases, it’s not a good idea to ignore a debt collector. Yes, even though they’re stressful and sometimes aggressive. Unfortunately, ignoring a debt collector won’t make them stop sending letters or making collection calls. it won’t make the debt go away either. So your best bet is to learn about your rights and their limitations and empower yourself to confidently take action on your unpaid debt.

Where should you start? It’s almost always a good idea to start by asking the debt collector to verify the debt they’re trying to collect. This allows you to see how the amount of the debt was calculated and if the debt collector really has the legal right to collect the debt. From there, you can decide whether you want to dispute the debt, offer a settlement, or get extra help. (See “If You Can’t Afford To Pay the Debt, Take Other Action!” below.)

What Are the Consequences of Ignoring Debt Collectors/Collection Agencies?

There are several potential consequences if you ignore a debt collector. 

If you ignore an attempt to collect debt, your debt will continue to grow. The amount of money you owe continues to accumulate interest charges and sometimes also late fees or collection fees. You’re also likely to get several phone calls and letters, which can be mentally taxing and stressful. 

While debt collectors can contact you (unless and until you tell them to stop), state laws and federal laws, like the Fair Debt Collection Practices Act (FDCPA), protect you from harassment. Collection agencies will also report the debt to the credit bureaus, which can seriously hurt your credit report and credit score.

Worst case scenario, the original creditor or the collector may sue you. If you don’t have a good defense, they can get a judgment against you, which allows for more aggressive collection measures. For example, the collection agency can then create a lien that attaches to your property or garnish your wages. This allows them to collect money right out of your paycheck. 

If a creditor sues you, don't give up! Make them prove that you owe the debt. Answer their summons and mount your defenses. You may want to hire a debt collection attorney. If you cannot afford a lawyer, contact legal aid. You may end up saving yourself a lot of money. Even without a lawyer, you can win the case. To learn more, read our article: You Can Win That Debt Collection Lawsuit. 

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When Is It a Good Idea Not To Pay a Debt Collector?

In some cases, paying a debt collector may not be the best choice. Even if you don’t pay a debt collector, you should still contact them to explain what’s going on and why you don’t have to pay. Here are three scenarios to consider.

If You Can’t Afford To Pay the Debt, Take Other Action!

It isn't a good idea to pay a debt collector the full amount that is past-due if you can't afford it. In most cases, when you haven't paid the original creditor, it's because you couldn’t afford to pay it. It would be reasonable to assume that you also can’t afford to pay the debt collector. In this case, you may want to take advantage of a free consultation with a nonprofit credit counselor.

The credit counselor will consider your financial situation and make a recommendation. They may suggest any of the following:

Each of these helps in a different way. With a debt management plan, the credit counselor will contact your creditors and negotiate a better interest rate and payment plan that will allow you to pay the full balance. With a debt consolidation, you will use a loan to pay off all your debts. With a debt settlement, either you or a paid negotiator will contact the debt collector and negotiate a settlement for less than the full amount due. 

The most powerful tool available is bankruptcy. You can start with a free consultation with a bankruptcy attorney to see if this is the right path for you.

If the Debt Is Time-Barred Because It's Old Debt, Know Your Rights

If the debt is old and the statute of limitations has run out, the creditor loses the right to bring legal action against you, the lender. Sometimes this is called time-barred debt. Each state sets its own statute of limitations on time-barred debt, which may vary by the type of debt or contract.

The start date for the statute of limitations is also a matter of state law. Does it begin the day you signed for the debt? The last time you made a payment on the debt? The first time you didn’t make a payment? These issues can get complicated.

It’s important to note that statute of limitations is a defense, not an automatic bar to a lawsuit. In other words, to benefit from the statute’s protections, you must respond to the lawsuit and raise the statute of limitations as a defense. 

If you think the statute of limitations has expired, you may want to consult with an attorney in your state. You may be able to get free legal advice by contacting legal aid. You could also contact your state attorney general's office. The Federal Trade Commission (FTC) provides good information about how to deal with collectors trying to collect time-barred debt.

If you can prove a debt is time-barred, and it's not the original creditor that's trying to collect, you may be able to sue the debt collector under the FDCPA. In this case, it’s a good idea to contact a consumer attorney.

If You Are Judgment Proof, Know Your Rights

If you are judgment proof, that means that even if a debt collector sues you and wins a judgment against you, there is nothing they can legally do to collect the judgment amount. You’re considered judgment proof if all your income is exempt from wage garnishment and you have no nonexempt assets that the debt collector could seize.

Being judgment proof isn’t an official status, and it can change if your financial situation improves or if you receive an unexpected windfall, like an inheritance or lottery money. If you are no longer judgment proof, the creditor will then be able to collect on any judgment they won against you, even if you were judgment proof at the time. That said, most judgments do have an expiration date, which is determined by state laws. A creditor can’t collect a judgment against you if the judgment has expired.

Remember, being judgment proof doesn’t mean that you don’t owe the debt. Creditors and debt collectors can, and likely will, continue to contact you to find out whether your financial circumstances have changed. If the debt collector is not the original creditor, you can send a written notice demanding a stop to the collector calls. If they do not stop contacting you, they may be in violation of the FDCPA. The FDCPA usually does not apply to the original creditor but does apply to collection companies and debt buyers.

How Bankruptcy Can Help You With a Collection Agency

Bankruptcy is the most powerful tool in your arsenal to deal with any debt. 

Regardless of the type of debt the debt collector (or original creditor) is trying to collect, the automatic stay stops collection activities the minute you file. The stay remains in effect until either the debt is eliminated by discharge or the case is dismissed by the court. Whether the debt is discharged depends on the type of debt and the type of bankruptcy you file.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of consumer bankruptcy. It can eliminate most of your debts, such as credit card debt and medical bills, in three to four months. A Chapter 7 bankruptcy doesn’t eliminate most secured debts unless you surrender the collateral

There are also certain unsecured debts, that can’t be discharged in a Chapter 7 bankruptcy, such as recent tax debt and court-ordered support payments. You may be able to have your federal student loans discharged, but you’ll have to take additional action to prove they’re causing undue hardship.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is another kind of consumer bankruptcy. It takes longer because there is a 3–5 year repayment plan. If you don’t qualify for Chapter 7 because your income is too high, or if you have a lot of secured debt for which you wish to keep the collateral, you can look into Chapter 13. While you can file a simple Chapter 7 case on your own without a lawyer, most filers find that they need to hire a bankruptcy attorney for a successful Chapter 13 filing.

Is Bankruptcy Right for You?

The debt solution for you is completely dependent on your particular financial situation. Like fingerprints, everyone has a unique financial situation. Carefully consider your personal finances and all your debt relief solutions before deciding what’s right for you. To learn more, read this article: What is Chapter 7 Bankruptcy & Should I File? 

Let’s Summarize…

If you don't pay a debt collection agency, there can be several consequences. Your debt will continue to grow. You’ll have to deal with the stress of collection agencies contacting you. Your credit score will take a hit. And you could even be sued and have your wages garnished.

At some point in the collections process, ideally before being sued, discuss the situation with a nonprofit credit counseling agency or a bankruptcy attorney. Nonprofit credit counselors are the best place to start. If you think bankruptcy might be the best solution, Upsolve provides a free tool to help you file your own Chapter 7 bankruptcy. In more complicated cases, it's good to contact an experienced bankruptcy attorney in your area. 

Written By:

Attorney Paige Hooper


Paige Hooper is a seasoned consumer bankruptcy attorney with 15 years of experience successfully representing debtors in Chapter 7, Chapter 11 and Chapter 13 cases. Paige began practicing bankruptcy law in 2006 and started her own solo, multi-state bankruptcy practice in 2012. Gi... read more about Attorney Paige Hooper

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