How To Deal With Debt Collectors When You Can’t Pay?

If you have a debt, you have to pay it. This is the only way to get debt collectors off your back.

Debt often eats people alive. The average American has $90,460 in debt, and this is not a small amount to pay back. People spend years and years- and often their whole lives- to get ahead of the money they’re indebted to.

The money you’ve borrowed, you HAVE to pay back, as per the agreement and interest rate. But of course, with rising expenses each month, there is a chance most people won’t be able to keep their end of the deal by paying their debts.

So when you know you can’t pay back because you don’t have the money, how do you deal with your lenders?

What happens when you don’t pay Collections?

If you’ve borrowed money from lenders, you have to pay back. But if you can’t, there are a couple of consequences that may come your way. Whatever your reason for not paying, lenders are concerned with the money and won’t leave until they get their share.

Debt collectors are carefully managed at both the government and state level. They’re not permitted to simply do anything they like to pressure you into paying your debts. The Fair Debt Collection Practices Act (FDCPA) contains a rundown of decisions that debt collectors must follow at whatever point they endeavor to gather a defaulted debt.

This is what happens if you ignore debt collectors:

Report to Credit Bureaus

One of the most well-known activities that a debt collector may take when you neglect to pay is to report your record to the three significant credit departments. At the point when a collection account is added to your credit reports, the outcomes can be serious. Collection records can stay on your credit reports for as long as seven years from the date of default of the first record.

And this will surely bring down your credit scores. At the point when your credit is harmed by collection accounts, this can likewise cause many inconvenient results, for example,

  • Denial of loan and credit card applications
  • Higher interest rates if you are approved for financing
  • Difficulty getting hired if an employer performs a credit check
  • Higher insurance premiums

A Debt Collector can Sue you

The absolute most unnerving things that a debt collector can do is file a lawsuit against you for not being able to pay back the amount that is due.

In the event that the debt collector sues you and wins the claim, or you neglect to react hence losing of course, the court will enter a judgment against you. Contingent on the state where you dwell, a judgment may likewise open up the following possibilities:

High Interest Rates

Not all applications are denied due to a collection report on your credit record. You may be endorsed, yet you’ll be needed to pay a higher loan fee to make up for the extended danger of nonpayment.

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

Different services, similar to cell phone or cable services, may expect 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 every month.

Future Employment

Most employers look at the employees records and do extensive background checks before hiring them, thus an employee with a poor credit history may make it harder for them to get recruited in big companies. A poor credit score reflects badly on a person for not paying back their lenders on time.

Can a Debt Collector refuse a Payment Plan?

When you’re sure that you can’t pay back whatever amount is due, the only option left for you is devise a repayment plan and then stick to it. With whatever you can afford to pay, you can add in the new payment plan and hope that the creditor accepts it.

Naturally, a debt collector can’t accept or reject your payment plan, that is purely up to your creditor. But what if they also reject your payment plan?

Then what you can do is start paying anyway. Nothing builds up more trust than when you start paying even with what little you have. This will prove to them that you’re doing your best, and paying anyway is like your gesture of goodwill.

You can also try your luck by telling them about other creditors who have accepted your payment plan offer, and how they should also trust you this time. Moreover, you can also explain to them how their payment plan will affect your income stream and that you want them to accept your payment plan to avoid budget constraints.

What happens if Debt Collectors can’t find you?

If debt collectors are unable to locate you through your registered telephone number or home address, they are in their rights to contact third parties to find you. They can contact your friends or relatives and ask them where you are. However, they are not allowed to disclose the reason they’ve been looking for you- that you owe them a debt.

Even if they can’t find you, they can’t write threatening emails or threaten you in any other form to have you return the money. The only way they can do so is legally, by filing a lawsuit against you, but they cannot conform to any means of harassment or bullying.

How to get out of Paying Debt Collectors?

There is no way you can get out of paying debt collectors, unless they suddenly become generous and you become lucky and they forgive their debt to you. While that is rarely going to happen to anyone, there are ways to deal with debt collectors when you can’t pay:

  1. Firstly, don’t ignore them. They will keep pestering unless you pay them the amount, and if you’re just ghosting them, it will make matters far worse. This will also negatively affect your credit scores and debt history.
  2. Get everything in writing– debt collectors must have everything in writing that you’re asking for the debt back and how much you owe at the end of the term including interest.
  3. Try settling or negotiating with the creditor by asking them more time, proposing a doable payment plan and asking them to lower down the interest. This may or may not work, but you could try your luck here.
  4. Know your rights! Debt collectors can’t go out of their way to take out debt from you- they can’t harass you or bully you into paying, they must not call you at odd hours (they must only contact you from 8am to 9pm).
  5. Challenge the debt- You have a right to dispute the debt. If you challenge the debt within 30 days of first contact, the collector cannot ask for payment until the dispute is settled. After 30 days you can still challenge the debt, but the collector can seek payment while the dispute is being investigated.

High-Priority Debts

High-priority debts customarily include:

Mortgage: You’ll probably lose your home to an abandonment on the off chance that you don’t make the home loan installments. In case you’re experiencing difficulty remaining current, you may have the option to work out an advance change and get a more moderate monthly installment. If you’ve lost your employment or had another monetary misfortune, cautiously consider whether you should sell your home and lease a less expensive apartment. You would then be able to utilize what’s left over to take care of your other basic tabs.

Child support: Neglecting to pay child support can land you in prison. Also, a child support debt never disappears- it doesn’t lapse, and you can’t clear it out.

Utility bills: Being without gas, power, heating, water, or a phone isn’t insured. Put these bills close to the first spot on your list.

Car loans: In the event that you need to keep your car, it’s ideal to stay aware of these loans. If you can’t maintain the loan, you can think of selling the vehicle. You may have the option to utilize any extra cash to purchase a less expensive vehicle.

Other secured loans: If you don’t pay a secured debt back, the creditor might be able to come and get the property without first suing you in court. If the item is something you can’t live without, make the payments. Otherwise, don’t be too concerned about missing a payment or two. (Keep in mind, though, that a default or repossession will show up on your credit report for seven years and will affect your ability to get credit in the future.

Student loans: Paying your student loans is at times fundamental, similar to when the IRS is going to capture your assessment discount, the holder of your credit takes steps to garnish your wages, or you’re making installments under a “sensible and moderate” reimbursement intended to rehabilitate your loan and get out of default.

Unpaid taxes. If the IRS is about to take your paycheck, bank account, or other property, immediately contact the IRS to work out a repayment plan.


If all else fails and you’re still unsure on how to deal with debt collectors knowing you can’t pay, you can resort to filing for bankruptcy. In the event that agreeing with your lenders is illogical, you need more opportunity to make up for lost time with making sure about debt, or need to stop a wage garnishment, bankruptcy might be the best solution.

You ask the liquidation court to kill (release) the debts you owe. However, remember that not all debts are dischargeable and not every person meets all requirements to petition for Chapter 7. Everyone should be mindful of their financial capacity before filing for a loan- and this means if you already have a hefty mortgage to pay or student loans each month, you shouldn’t be looking for more personal loans or insurance policies.

Take the debt you’re able to repay within time to avoid a hit to your credit scores- having a good credit score is always the best way to go!

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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