Your Options in Debt Collection
Getting contacted by a debt collector can feel overwhelming. The first step is to get more information about the debt collector and the debt they say you owe.
Once you understand what the debt is about, you can make an informed decision about what to do next. This article explains your main options and what to think about with each one, so you can choose what works best for your situation.
The rules may be different depending on your debt. Many of the rules and protections in this article apply to debts for personal, family, or household things, called consumer debts. Debts related to work or a business, child or spousal support, a criminal case, or taxes may have different rules. For more on what is and is not a consumer debt, go here.
- Option 1: Pay the debt in full
- Option 2: Set up a payment plan or negotiate a settlement
- Option 3: Dispute the debt
- Option 4: Do nothing (but know the risks)
- Option 5: Explore whether bankruptcy makes sense
- Option 6: Get legal help or financial counseling
Option 1: Pay the debt in full
Paying the full amount may be the fastest way to resolve the debt if it’s correct and you can afford it.
Before you pay:
- Make sure the debt is real and the debt collector is legitimate. Learn how to check out the details of your debt in this article.
- Get the amount confirmed in writing.
- Ask for a receipt or written confirmation that your account is paid off (settled).
- If the debt is on your credit report, make sure that whoever you owed the debt to reports it as "paid" or "settled."
Option 2: Set up a payment plan or negotiate a settlement
If you can't pay the full amount, you may be able to:
- Make smaller payments over time.
- Settle the debt by offering to pay a lower lump sum.
Before you agree to anything:
- Get the agreement in writing.
- Make sure you can afford the payments.
- Ask how it will affect your credit report.
- Be aware that settling for less may have tax consequences.
For more information:
Option 3: Dispute the debt
If you think the debt isn't yours, the amount is wrong, it was already paid, or was erased in bankruptcy, you can dispute it. You can also dispute the debt to get more information and ask the debt collector to prove you owe it.
To dispute a debt:
- Send a written letter within 30 days of when the collector first contacted you.
- Say that you "dispute" the debt, or ask them to "treat the debt as disputed."
- You can explain what you think might be wrong and include any proof you have, but this is not required to dispute it.
What happens next:
- If you send the letter in time, the collector must stop trying to collect until they send you written proof.
Option 4: Do nothing (but know the risks)
You don't have to respond, but ignoring the debt won't make it go away. This may lead to:
- Ongoing collection calls or letters
- A lawsuit and court judgment saying you legally owe the money
- The debt collector taking money from your paychecks or bank account to pay the debt
In some situations, however, not responding may be the right choice:
- You're sure it's a scam. Real debt collectors should send written notices, give you the name of the original creditor, and explain your rights. If they don't, it may be a scam. How to tell if a debt collection call is real or a scam.
- You've already disputed it but they haven't replied. If you disputed the debt within 30 days and the collector hasn't sent proof, they legally must stop trying to collect.
- The debt is very old. Most debts can't be collected through the courts after a certain number of years. In Oregon, it's usually six years since the last payment. If you agree that the debt is yours or make a payment on an old debt, it might restart the clock and make it easier for them to sue. Do I have to pay a debt that's really old?
- You are collection-proof and understand the consequences. If you have little or no income or your money comes from protected sources like Social Security or disability benefits, a collector may not be able to take your money even if they sue you. What does it mean to be collection-proof?
Option 5: Explore whether bankruptcy makes sense
If you have more debt than you can afford to pay, bankruptcy might be an option.
Bankruptcy is a legal process that can help you wipe out certain debts or set up a plan to repay them over time. It can stop debt collectors, lawsuits, and wage garnishments while your case is being reviewed.
Bankruptcy is not the right choice for everyone, so it's important to talk with a lawyer to understand if it's a good fit for your situation.
Option 6: Get legal help or financial counseling
If you're not sure what to do, you can talk to:
- A legal aid organization (free help if you qualify).
- A consumer protection or bankruptcy attorney.
- A nonprofit credit counselor.
They may be able to help you understand:
- If the debt collector has a legal right to collect the debt.
- What your rights are.
- Whether bankruptcy or another legal option could help.
- What options make the most sense for your situation.
Find help: