How to deal with debt collectors when you cant pay

By Izzy M
Modified on June 7, 2023
how to deal with debt collectors when you can't pay

Getting calls and letters from debt collectors can be stressful and annoying. What are your financial options if you don’t currently have enough money in your bank account to pay a collection bill? Learn more about debt collectors and how you can avoid negatively impacting your credit report.

What Is a Debt Collector?

Wondering how a debt collector works? A debt collector can be a collection company or lawyer that collects unpaid debts under the authority of the federal Fair Debt Collection Practices Act (FDCPA). Various businesses hire debt collectors to efficiently collect unpaid debts and reduce legal costs. 

You can expect contact from a collections agency for any of the following bills:

  • Late medical bills
  • Missed car loans
  • An unpaid student loan
  • Past due child support

Debt collectors typically establish contact by calling your phone or mailing you a debt verification letter. Federal law requires collection agencies to provide a verification letter if you ask for one. This letter contains information on the original creditor and your unpaid debt. To protect yourself, ensure you keep track of all communication. 

Suppose a debt collector fails to provide a verification letter after you have requested one. In that case, they are in violation of the FDCPA, and you may report them. Contact your state attorney general’s office, the Federal Trade Commission (FTC), or the Consumer Financial Protection Bureau (CFPB) to issue a report. You have grounds to sue the collection agency, and if you pursue legal action, you may win up to $1,000. 

If a debt collector contacts you, don’t panic just yet. It’s possible you may not even have an unpaid debt. According to the Federal Trade Commission (FTC), about 49% of debt collector complaints were about incorrect debts. Carefully review your verification letter for errors. 

Debt collectors use various tactics to collect unpaid medical bills and credit card debts. You may not even be the intended target! Debt collectors tend to call friends and family of the individual with outstanding debt to provide contact information. 

What if I Am Harassed by a Debt Collector?

Federal law allows debt collectors to contact you through various means to pay off your debt. However, the Fair Debt Collection Practices Act prohibits harassment of any kind. 

There are various types of harassment. Here are a few examples:

  • Abusive or profane language 
  • Repetitious phone calls
  • Violent Threats
  • Deceptive practices
  • Threats of arrest

Suppose a debt collector is harassing you. In that case, you can contact your state’s attorney general or the Consumer Financial Protection Bureau (CFPB). You submit a claim online or by calling (855) 411-CFPB (2372). 

If you want to take legal action, you may sue the debt collector for FDCPA violations. Suppose you win a lawsuit against a debt collector. In that case, the debt collection agency may pay your lawyer’s fees in addition to the civil action compensation.

How To Verify if a Debt Collector Is Legitimate?

Do not pay right away if you receive a call or letter from a debt collection agency! There are debt collection scams to be wary of. It’s essential to first verify you are dealing with a legitimate debt collector. 

If you receive debt collector calls, it’s vital to avoid disclosing personal or financial information. Ask the caller to provide their name, the collection agency’s name, address, and phone number. Some states in the United States provide licenses to debt collectors, so you can ask for a professional license number.

These are a few warning signs that you are dealing with a scam artist:

  • The debt collector won’t provide information on your debt
  • The debt collector won’t give an address or phone number
  • They threaten you with arrest or criminal charges
  • The debt collector pressures you into giving up financial information 

If you suspect calls from a debt collector are fraudulent, end the call and stop speaking with the caller. You may submit a complaint to the Consumer Financial Protection Bureau (CFPB) or contact your state’s attorney general. 

The best way to verify debt collector legitimacy is to contact the original creditor directly or request a written validation notice. The validation letter will include the name of the creditor you owe money to, your debt amount, and your federal rights under the Fair Debt Collection Practices Act. 

What if You Ignore a Debt Collection Agency?

Dealing with debt collectors can be overwhelming, especially when you don’t have enough money in your bank account to negotiate a payment agreement. So can you just ignore them? Yes! You can write a letter to the debt collector to request they stop contacting you about that unpaid credit card debt. 

While you can cease contact with debt collectors, keep in mind that you are not freed from your debt obligations. You could still be hit with a lawsuit by the debt collection agency. In addition, the Debt collection agency may report your delinquent debt to the three credit bureaus.  

Negative financial information will show up on your credit report and decrease your credit score. You may get two negative accounts on your credit report, one from the creditor and one from the debt collection agency. If you actively avoid debt payment, the collection agency can continue to report on your financial activity for seven years. 

How Do I Make a Payment to a Debt Collection Agency?

Once you have verified that the debt collector is legitimate and that the debt you owe is accurate, you can start working on a payment plan. While some debt collectors do offer payment plans, most do not! You will likely have to find an alternative payment plan option. 

Suppose you need help organizing your finances to get a debt paid. In that case, you can get financial guidance from a counselor at a credit counseling organization. If you don’t have enough money at the moment to deal with debt collectors, you can take out a loan to help pay off the debt in one lump sum.

These are a few financial options to deal with debt collectors:

Work With a Credit Counseling Organization

If you have reservations about paying debt collectors, consider speaking with a lawyer or a non-profit credit counseling organization. A credit counseling organization can provide financial advice and help you establish a budget to get out of debt when you’re drowning. Counselors are financially certified in debt management, budgeting, and consumer credit.

When you’re married, handling finances can be stressful because both spouses have to be on the same page. A counselor can help couples create a budget plan to balance income and multiple monthly bills. Learning to stick to a budget plan with your partner can make your life significantly less stressful. 

A counselor from a credit counseling organization can provide free education materials so you can learn what it means to become financially stable if you need financial information. Check out the Financial Counseling Association of America or the National Foundation for Credit Counseling to find a credit counselor near you. 

Take Out a Loan To Pay Off Debt Collectors

Using a loan to pay off a debt collector can help you preserve your credit rating and obtain an affordable repayment plan. There are plenty of loan options to choose from. Still, these financial institutions could help you get a significant amount of money:

Car Title Loan

A car title loan, also known as a pink slip loan, is obtained by using your car as collateral. A lien is put on the certificate of title during the approval process. This gives the lender temporary ownership of the car while you pay off the loan. Some lenders require possession of the car, so you may be without reliable transportation for a set period. 

Most cars are worth a few thousand dollars, so you could get enough money to pay off debt collectors. A good credit score is not required for car title loan qualification, but the interest rates can be very high. Car title loans may seem like an excellent financial option when you’re in a pinch, but you can lose possession of your car if you fall behind on payments!

Traditional Bank Loan

A traditional bank loan can help you get a considerable loan amount and affordable rates. Unfortunately, many people do not meet the strict qualification requirements set by these financial institutions. If you do not have a high credit score, you will likely be ineligible for a loan from the bank. A good credit score is anything higher than 670 on the credit scoring model. 

If you need money as soon as possible to pay off debt collectors, you may not receive it in time. Even if you qualify for a traditional bank loan, the approval process can take a few days. The verification process is comprehensive, so you may be forced to wait for your money to be sent to your checking account. If your debt is due tomorrow, you may simply be out of luck with bank loans. 

Personal Installment Loan

Personal loans are a great option if you want an affordable repayment plan to pay debt collectors. There are different types of personal loans to choose from, depending on your financial needs and repayment preferences. For example, with no credit check loans, guaranteed approval is possible or there are bad credit personal loans. And so, you don’t have to worry about your low credit score because the qualification requirements can be flexible. 

The interest rates for personal loans are based on your credit score. If you have a low credit score, know that the interest rate you qualify to receive may still be more affordable than other fast cash options. Eligible borrowers may also choose the amount of time they want to pay off the loan. The repayment length maybe a few months or a few years, depending on your financial situation. 

Dealing with debt collectors is stressful, but you have various financial options at your disposal! If you lack the money to pay a collection debt, don’t feel like your only option is to contact a bankruptcy attorney. You could secure the emergency money you need to pay medical bills and other time-sensitive debts even with a low credit score. Consider your loan options carefully and work towards getting your life back on track. 


What is a debt collector and why are they contacting me?
What is harassment by a debt collector?
What Is a Debt Validation Letter?
How can I verify whether or not a debt collector is legitimate?
What is credit counseling?

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