No one wants to receive a call from a debt collector. But if you’ve fallen behind on paying your credit cards, loans or bills, your account may be sent to collections.

Dealing with these debt collection companies can be stressful and embarrassing, but it’s more common than you think. In the first quarter of 2025, the U.S. hit $18.20 trillion in household debt, and the average delinquency rate went up 0.7 percentage point from the previous quarter to 4.3 percent.

Paying off your outstanding debts is important, but you want to do it the right way. A misstep here and there can result in you paying more debt than you owe, reopening zombie debt or exposing yourself to a scam.

Bankrate insight

As you move through this process, document everything. Keep copies of letters, emails, payment receipts and any agreements you make with the collector. Also note the dates of phone calls and what was said in the call. If you live in a one-party state, you could consider recording your phone conversations.

1. Confirm the debt is yours

Before taking any action to pay off a debt in collections, verify the debt belongs to you. Gather all relevant information about the debt, including the amount owed, the original creditor and any other account facts.

If, after reviewing this information, you find that the debt is not yours, take steps to protect your credit and finances in case your identity has been stolen. You can dispute errors directly with the credit bureaus. If the debt doesn’t appear on your credit reports, you might have been targeted by a debt collection scam.

2. Know your debt collection rights

Under the Fair Debt Collection Practices Act (FDCPA), collectors must follow strict rules:

• No calls between 9 p.m. and 8 a.m.
• No calls at work if you’ve requested they stop
• No excessive calls — no more than seven in a week or within seven days of last speaking to you about the debt
• No contacting you via email, text or social media if you’ve opted out
• No disclosure of your debt to others

Debt collectors are also strictly prohibited from harassing, threatening or verbally abusing you.

If a debt collector breaches these regulations, you can contact your state’s attorney general’s office to find out your rights under state law. They can help you identify if you are protected under state-level collection regulations and laws like the California Consumer Financial Protection Law (CCFPL) and the Debt Collection Licensing Act (DCLA).

3. Check the statute of limitations

Each state has a statute of limitations determining the legal time limit within which creditors or debt collectors can sue you for an unpaid debt. Statutes for different types of debt range from as little as two years up to 10 years or more. Once the statute is up, you can’t be sued for the unpaid debt.

However, it’s important to know that you can reset the statute clock on old debt if you:

• Agree to pay
• Get a bankruptcy discharge revoked
• Make a new charge on the account
• Make a payment

Understanding how these statutes work is essential as it impacts your legal obligations and rights regarding the debt. Research the statute of limitations in your state to know your rights.

4. Determine collectability

Not all debts are collectible. For instance:

• Medical debt under $500 or less than a year old can’t appear on credit reports. Soon, medical debt will be completely barred from appearing on credit reports.
• Zombie debt — or very old debt — may no longer be legally enforceable. This debt is often past the statutes of limitations and may be too old to legally appear on your credit reports. You need to be especially careful to avoid resetting the clock on zombie debts.

In addition to verifying the debt is collectible, you should contact the collection company and request a debt validation letter to ensure it has a legal right to collect on your debt.

5. Figure out how much you can pay

You may have more debt than you can pay off in a reasonable timeframe. In that case, you may be able to negotiate with your creditors about how much and when you pay. But first, you have to calculate how much money you can afford to commit to paying down your debts.

Start by reviewing your budget and seeing how much cash you can free up. Determine how much money you could contribute to a lump sum payment or monthly installment. Be realistic and don’t put yourself in a position where you need to take on more debt to pay off your existing debt.

6. Negotiate a settlement with the collector

Once you’re informed and have an idea of how much you can realistically pay, it’s time to contact the collector. Be prepared to discuss your financial situation honestly and weigh different repayment plans. Effective negotiation can often lead to a reduced amount or favorable payment terms, especially if you pay a lump sum up front.

Bankrate tip: For medical debt, contact the provider’s billing office directly. They may offer hardship assistance or flexible plans.

Pay-for-delete agreements

As a part of negotiating a payment plan, during your repayment period or after the collection has been settled, you may be able to request pay-for-delete agreement. This means the collection agency will remove the collection account from your credit report once repayment is complete.

Get any pay-for-delete agreements in writing, and follow up with the creditor or collector to ensure the deletion request is processed. Be aware that changes to your credit reports can take 30 days or more to appear.

Very few creditors will not offer a pay-for-delete agreement, but you can still ask.

7. Set up a repayment plan

Once you’ve agreed on repayment terms, formalize the agreement in writing.

Include:

• Payment amount
• Payment schedule
• Any additional terms or conditions.

A clear plan reduces misunderstandings and ensures both parties follow the agreement accurately.

8. Make your payments as agreed

Stick to the schedule and send payments promptly. This demonstrates good faith and prevents further collection efforts.

For added security, consider:

• Mailing a check via USPS with a return receipt ($4.10) or using email confirmation ($2.62)
• Requesting a “Certificate of Mailing” for proof of payment date

How to pay off a debt in collections online

To pay online, first confirm the debt and request instructions from the collection agency. Most have secure portals where you can log in to make payments.

Always:

• Verify the site’s legitimacy before entering payment info
• Save digital receipts and confirmation numbers
• Monitor your credit to ensure updates are reflected

Bottom line

Debt in collections can take a toll on your finances and peace of mind — but you’re not powerless. By verifying the debt, knowing your rights and negotiating smartly, you can pay off collections while protecting your credit and avoiding scams.

Frequently asked questions

• How does debt in collections affect your credit score?
  

  Debt in collections has a huge impact on your credit score, especially if the debt also had late payments or a charge-off associated with it. It can take up to seven years for your credit to fully recover from one collection account.

  As time goes on, however, if you use good credit-building habits, negative marks will have less impact over time as newer things on your credit score have the most influence.

  If you need help fighting a collection account error or fraud, you can contact a reputable credit repair company.

• What’s the safest way to pay a debt collector?
  

  Use payment methods that offer proof of payment — such as mailing a check with return receipt or using a secure online portal provided by the agency.

• Do collections go away once paid?
  

  No. Typically, paid collections will remain on your credit reports for up to seven years from the date of the original delinquency. However, lenders view paid collections more favorably than unpaid ones.

• What happens if you never pay collections?
  

  If you ignore or refuse to pay collections, the debt collector may escalate efforts to recover the debt. These could include:

  • Take legal action
  • Garnish wages (portion of paycheck withheld to pay off debt)
  • Continue reporting the debt

  Unpaid collections that pass the statute of limitations can still severely impact your credit score and make it harder to secure loans or credit in the future.