How to Pay Off Collections

Written By: Attorney Robert Stiberman | Debt Consolidation, Finances, Wage Garnishment Updated April 18, 2023

If you receive a letter from a debt collection agency or are receiving phone calls about missed payments, you may be tempted to ignore these contacts, especially if you are unable to pay the debt. However, there are ways you can pay off collections or take other avenues to get out of debt. To help you get started, our bankruptcy attorney in Florida is sharing the steps you need to take if you are being contacted by debt collectors.

Understanding Debt Collection

If you miss several payments on a debt, the company you owe may send your account to their collection department or sell your debt to a third-party debt collection agency. When this occurs, you will begin receiving letters and phone calls to inform you of the debt, and, in some cases, you will be notified of a lawsuit against you. In a lawsuit for debt, they will attempt to have an entry of a judgment placed against you which may allow them to garnish your wages or repossess your assets.

Types of Debt That Go Into Collections

• Credit card debt
• Medical debt
• Unpaid utility bills
• Student loans
• Personal loans
• Backed rent or paying for damages on a rented property

What Happens If You Don’t Pay Off Collections

When you receive a notice from a collection agency to pay a bill, you may consider ignoring it. After all, if you couldn’t pay before, why would they think you could pay now? You may even feel helpless or intimidated by threats and harsh communication these creditors often use to scare people into paying.

However, if you don’t pay your debt, two serious outcomes can occur.

1. Your credit score will be negatively impacted. If you don’t pay a bill, this will stay on your credit for several years, bringing your score down and making it difficult to secure credit, rent property, or even get a job in the future.
2. You are at risk of having your wages garnished if the debt collection agency files a suit and gets a judgement against you.

How to Pay Off Your Collections

When you receive notice from a collection agency, follow these steps to get back into good standing.

1. If you receive notice of a lawsuit or you have concerns about the validity of the debt, it’s important to speak with an attorney who can assist you. They may be able to contest the debt, determine if the statute of limitations has passed, or help you avoid having your wages garnished or your accounts frozen.
2. If you are not at risk of lawsuit at the time of the notification, it’s important to verify the debt to ensure you aren’t a victim of identity theft. Run a free credit report to check the information, make sure your name is spelled correctly, and even send a written request to the collection agency asking for information or proof to back up their claim that you owe them.
3. Contact the Consumer Financial Protection Bureau to learn about your rights or report incidents of threats, intimidation tactics, or other prohibited behavior from debt collectors.
4. Determine if there is money in your budget to make and sustain payments to the collection agency.
5. Contact the collection agency or department and set up a payment arrangement. If they do not accept your ability to pay, or you can not make payments on the debt, you may want to speak with an attorney about filing for bankruptcy.

Should You File for Bankruptcy?

As we mentioned above, if you are unable to make payments on your debt, filing for bankruptcy may be the best option to prevent your wages from being garnished or your assets seized. By filing for bankruptcy, many of your unsecured debts can either be liquidated and discharged or restructured and paid off in three to five years depending on your circumstances. While bankruptcy won’t allow you to discharge government-backed student loans, most tax debt, and domestic debt, such as child support or alimony, it can discharge other debts, allowing you to catch up on your other payments.

Schedule a Free Consultation with a Bankruptcy Attorney in Florida Today

If you can’t pay off collections or are struggling with other types of debt, filing for bankruptcy may be the best action for your financial future. To learn about your options and see if this is right for you, schedule a free consultation with our team today by calling [phone] or filling out the form below.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney adept at handling Chapter 7, 13, and 11 filings, with more than 15 years of experience in bankruptcy cases. Robert represents clients in both consumer and business bankruptcy ... Read More