Do not pay anyone who phones you. Request written validation first — and know that in many states a single payment can restart the clock on a time-barred debt.
First: do not pay anyone who calls you
Collection scams are common, and they work because the target is frightened and wants it to stop. Before a dollar moves, you are entitled to verification.
Under the federal Fair Debt Collection Practices Act, you can request written validation of the debt. Send it in writing, keep a copy, and do not discuss payment until it arrives. A legitimate collector will comply. A scammer will escalate, threaten, or vanish.
Know what they cannot do
Third-party collectors in the US are legally prohibited from a long list of behaviours, including:
- Calling at unreasonable hours — generally before 8am or after 9pm your time.
- Contacting you at work after you tell them not to.
- Threatening arrest, or claiming you have committed a crime. Ordinary consumer debt is not criminal.
- Discussing your debt with family, employers or neighbours.
- Misrepresenting the amount, or who they are.
- Continuing to contact you after you request in writing that they stop — though this does not make the debt disappear.
Violations can be reported to the Consumer Financial Protection Bureau and your state attorney general. Keep a log of every call: date, time, name, what was said.
Every state has a statute of limitations on suing to collect a debt. Once it expires, the debt still exists but a lawsuit generally cannot succeed. In many states, making a payment or acknowledging the debt in writing can restart that clock entirely — which is why collectors pursue very old debts offering "just a small payment to get started". Before paying anything on an old account, find out your state's limit and how old the debt is.
What it does to your credit
A collection account is a serious negative mark and generally stays on your report for around seven years from the original delinquency — not from when it was sold or when you pay it.
Paying does not remove it, though newer scoring models treat paid collections more favourably, and some ignore them entirely. Medical collections in particular have been given additional protections in recent years. The mark still matters less over time, and it matters less than the accounts you are currently paying on time.
Negotiating a settlement
Collectors frequently buy debt for a fraction of face value, which means there is often genuine room.
- Offer a lump sum below the balance. Starting somewhere around a third is not unreasonable.
- Get the agreement in writing before you pay. Every term: the amount, that it settles the account in full, and how it will be reported. A verbal agreement is worth nothing when the collector changes.
- Never give direct bank account access. Pay by a method that cannot be repeated at will.
- Keep the settlement letter permanently. Debts get resold, and you may need to prove this one is closed years later.
One tax point people are caught by: forgiven debt over a threshold can be reported as taxable income. A large settlement may produce a tax form the following year.
If you are sued
Respond. Most collection lawsuits are won by default simply because the person never filed an answer — and a default judgment can lead to wage garnishment or a bank levy.
Responding forces the plaintiff to prove they own the debt and that the amount is correct, which with resold debt they sometimes cannot. Many areas have free legal aid for consumer cases, and it is worth an hour to find out.
Order of operations
- Request written validation. Pay nothing until it arrives.
- Check the debt is genuinely yours and the amount is right — errors are common after resale.
- Check your state's statute of limitations.
- Negotiate in writing if you decide to settle.
- Stay current on everything else meanwhile. Protecting the accounts still in good standing matters more than any single collection.
This is general information, not legal advice. Consumer protections vary by state, and a consumer law attorney is worth consulting for anything involving a lawsuit.