What Happens if You Don't Pay a Debt Collection

Can you just ignore those collection notices?

Image shows 4 a cell phone, a graph growing upwards, a gavel, and an icon showing a drop in a credit score. Text says: What happens if you don't pay a debt collection. Collector calls, credit report marks, unfavorable interest rates, lawsuits.

The Balance

If you default on a credit card, loan, or even your monthly internet or utility payments, you run the risk of having your account sent to a collection agency. These third-party companies are hired to pursue a firm's unpaid debts. You’re still liable for your bill even after it's sent to a collection agency.

Many people don’t want to pay collection agencies, perhaps because there’s no immediate benefit for paying off the debt—other than ending debt collection calls. However, before you decide to not pay off a debt in collection, make sure you know the consequences of ditching the outstanding balance.

Credit Report Impacts

Debt collectors report accounts to the credit bureaus, a move that can impact your credit score for several months, if not years. Your credit score will drop and already may have done so if the unpaid amount is for a credit card or a loan. The late payments and subsequent charge-off that typically precede a collection account already will have damaged your credit score by the time the collection happens.

While paying a collection notice isn't the most exciting thing to do with your money, you do receive some benefits from paying off the delinquent amount.

You can get the collectors to stop hounding you, and a paid collection looks better on your credit report than an unpaid one, particularly when it comes to getting new credit. It's worth reviewing your credit report periodically for any account collections that might not really belong to you, but if the collection is legitimately yours, it's typically better to pay it and be done with it.

Collector Calls

A debt collector’s job is to get you to pay your debt, and they don’t make a profit unless they collect on the debt you owe. You can expect constant phone calls and letters from debt collectors until you pay up.


Once a debt is in collections, paying the original creditor may no longer be an option. You'll have to work out a payment with the collection agency.

Fortunately, you can stop debt collector calls by writing and asking them to stop calling. Beware, because some debt collectors ignore the law and continue calling anyway. This is one of the reasons why debt collectors generate more complaints to the Federal Trade Commission than any other industry.

Collection agencies are typically assigned a debt for a few months. If they haven't gotten you to pay in that time, a new collection agency may take over the debt. The process repeats several times, possibly over several years until you finally pay up.

Because the debt gets passed around from one collector to another and they don't share records, you'll probably have to send a new cease-and-desist letter to stop the calls or a new debt validation letter to force each collector to prove you owe the debt.

Credit Report Marks

Debt collections are a serious delinquency and signal to other creditors and lenders that you haven’t always kept your payment promises. You are deemed a riskier borrower, and because of that, some of your applications for new credit may be turned down. You're especially likely to be turned down for a mortgage if you have unpaid debt collections on your credit report.

Whether you pay the collection or not, it stays on your credit report for the entire credit reporting time limit. Then, when that time period elapses, the collection will fall off your credit. You'll still owe the debt and the collector still can come after you if the debt is within the statute of limitations, but your credit report won't show the debt any longer.

Unfavorable Interest Rates

Not all applications are denied because of a collection on your credit report. You might be approved, but you'll be required to pay a higher interest rate to compensate for the increased risk of nonpayment.


If you have a high credit card interest rate, paying your balance in full allows you to avoid expensive finance charges.

Other services, like cellphone or cable services, may require you to pay an upfront security deposit. On a positive note, you'll get your deposit returned or credited to your account as long as you pay on time each month.

Job Hunting

Some employers check credit reports on potential employees. Having a collection on your credit report can keep you from getting hired, especially with financial jobs or upper-management-level jobs. In order to view your credit history as part of a background check, employers must receive your written permission. You could refuse to grant permission, but this is unlikely to reflect any better on your candidacy than a poor credit report.

Employers also cannot turn you down for a job based on information in your credit report without giving you a copy of the report, just as lenders are required to do when rejecting a loan application.


Collectors can sue you for a debt of any amount. If they get a judgment against you, they also can ask the court to garnish your wages to enforce the judgment. Don’t ignore a lawsuit summons, even if you believe the statute of limitations has passed on your debt. If you’re sued, consult an attorney on the best way to proceed.

Each state also has its own set of laws governing debt collections. This is one of the reasons why sound legal advice is a good thing to seek out whenever you are being contacted by a debt collector.

Frequently Asked Questions (FAQs)

How soon do you have to pay a debt collector?

If you know that you owe the debt, and collections activities are ongoing, you should pay as soon as possible. If you hold off for too long, you run the risk of being sued for the debt.

Will a debt in collections eventually go away?

It technically doesn't go away, but each state has a statute of limitations on how long a debt can be collected. Once that date passes, your debt is time-barred. You may hear from a debt collector about the debt, but they can't sue you for the debt because of the time limit.

Will paying a debt in collections help my credit?

Unless your debt is time-barred, meaning that it probably wouldn't be shown on your credit report, your credit will improve by paying off debt in collections. How much your credit improves will depend on other factors such as whether you have other collections accounts.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Experian. "Collections on Your Credit Report."

  2. Consumer Financial Protection Bureau. "Are There Laws That Limit What Debt Collectors Can Say or Do?"

  3. Federal Trade Commission. "Debt Collection."

  4. Consumer Financial Protection Bureau. "What Is a Debt Collector and Why Are They Contacting Me?"

  5. Experian. "What Is the Statute of Limitations on Debt?"

  6. Experian. "Why Do Higher Credit Scores Mean Better Interest Rates?"

  7. Verizon. "Your Verizon Deposit."

  8. Consumer Financial Protection Bureau. "Could I Be Turned Down For a Job Because of Something in My Credit Report?"

  9. Consumer Financial Protection Bureau. "What Is a Statute of Limitations On a Debt?"

  10. Federal Trade Commission. "Debt Collection FAQs."

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