How To Pay Off Debt In Collections Safely

Image by GettyImages; Illustration by Bankrate

Key takeaways

Before paying a debt in collections, verify that it’s both legitimate and collectible to avoid scams or zombie debt.
The Fair Debt Collection Practices Act (FDCPA) helps protect you from harassment and abuse by debt collectors.
Negotiating a payment or settlement plan, especially in writing, can help you resolve debt while minimizing damage to your credit scores.
Always document all communication and payments as evidence in case you need to file disputes in the future.

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 rose to 4.3 percent — up 0.7 percentage points from the previous quarter.

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.

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.

Document and keep copies of all communication

Keep copies of letters, emails, payment receipts and any agreements you make. 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.

2. 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. They impact your legal obligations and rights regarding debt, so research the statute of limitations in your state to know your rights. Contact the collection company directly to request a debt validation letter, which will confirm its legal right to collect on your debt.

3. 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 should 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.

4. 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.

Ask for a pay-for-delete agreement, or a removal for your credit report in exchange for payment. Very few collection agencies will agree, but it’s worth the ask. Be sure to get the agreement in writing and follow up until the item is deleted if you have luck with this approach.

Try contacting the billing office directly

For medical debt, contact your provider’s billing office. You may be eligible for hardship assistance or flexible repayment plans.

5. Set up a repayment plan

Once you’ve agreed on repayment terms, formalize the agreement in writing. Make sure these basic details are included:

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

A clear plan reduces misunderstandings and ensures both parties follow the agreement accurately. Be sure to stick to the schedule and send payments promptly. This demonstrates good faith and prevents further collection efforts.

For added security, consider paying online and saving your receipts — either as screenshots or PDFs — to create a digital paper trail. 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.

When you pay online, always:

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

You can also mail a check or potentially make payments over the phone, depending on the collection agency. Document these payments as well in case you need them for future reference.

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

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.
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.
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.
If you ignore or refuse to pay collections, the debt collector may escalate efforts to recover the debt, up to and including legal action that could lead to wage garnishment.

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.
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).