The Do's and Don'ts of Paying Debt Collectors

The Do’s and Don’ts of Paying Debt Collectors

By Dawn Allcot / February 12, 2014
advice on paying debt collectors


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If you have debt, it makes sense to want to pay it off as quickly as possible. You can preserve your credit rating and save thousands on interest by making on-time payments. But in some circumstances, paying debt collectors is not the wisest financial move. By the time debt collectors phone you, your late payments have already been reported to the credit bureaus. Making payments — especially if you can’t pay off the debt in full — extends the amount of time a late payment will appear on your credit report.

There are other things you should know, too, when you’re getting ready to pay off debt through a debt collection agency. Follow these do’s and don’ts to protect your money, your identity and your credit rating.

Do’s of Paying Debt Collectors

Do – Validate the debt to be sure it’s legitimate. You can find out how to validate a debt here. This practice buys you time with the debt collector and ensures you really owe the debt. Additionally, your creditors may not have the right information to validate the debt, and the debt may be forgiven.

Do – Know your rights if you have debt collectors calling you. – Debt collectors may not call your place of business if you ask them not to. You have several other rights, outlined in the Fair Debt Collection Practices Act. Know them before dealing with debt collectors. In some cases, it’s best not to answer the phone at all when a debt collector calls.

Do – Be cautious of what you say regarding your income, recent purchases, or your work situation through social media – More and more, debt collectors are using social media to track down people who owe money. Reporting news of a luxury vacation or a new job can provide fuel that debt collectors can use against you.

Do – Get everything in writing. – Even if you make arrangements to pay your debt, collectors are still permitted to call you. Demand everything in writing and, if it’s legal in your state, record phone calls with debt collectors, too.

Do – Use online bill pay through your bank if you make a payment to a debt collector. This method leaves a record of your payment but does not give debt collectors your checking account number. (We’ll outline some ways NOT to pay debt collectors below.)

Don’ts of Paying Debt Collectors

Don’t – Give debt collectors access to your checking account with a direct transfer or a debit card number. Debt collectors may (illegally) use this information in the future to withdraw additional payments you have not authorized.

Don’t – Use a credit card to pay a debt collection agency. Not only does this give debt collectors your credit card number to use in future transactions, but it also continues the cycle of debt. If the only way you can pay a debt collector is by accruing more debt, you are better off exploring other options, like speaking to a credit counselor or considering bankruptcy.

Don’t – Make a small payment on an account that’s been inactive for several months. There is a statute of limitations (typically seven years), after which you can’t be sued for collection of a debt. Additionally, after seven years from your last payment, the negative activity will drop off your credit report. Making small payments only drags out the debt, especially if you haven’t agreed to a payment plan.

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