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The Truth: Should You Never Pay a Debt Collection Agency?

George Simons | January 16, 2024

George Simons
Co-Founder of SoloSuit
George Simons, JD/MBA

George Simons is the co-founder and CEO of SoloSuit. He has helped Americans protect over $1 billion from predatory debt lawsuits. George graduated from BYU Law school in 2020 with a JD-MBA. In his spare time, George likes to cook, because he likes to eat.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Fact-checked by Patrick Austin, J.D.

Summary: When a collector contacts you, respond with a Debt Validation Letter. You may not want to pay a collector if you will never have any income or assets, if you don't owe the debt, if you want to settle for less, if the statute of limitations has expired, or if the collector doesn't own the debt.

You've heard that you should never pay a debt collection agency, and now you want the truth. What happens if you never pay collections? Should you pay the debt collector or the original creditor?

Debt collection agencies can employ a variety of shifty tactics. They may start with harassing phone calls and escalate from there. But depending on your situation, you may never need to pay a debt collector. Not sure where to begin? SoloSuit can help.

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Debt collection agencies buy your debt from lenders

Debt seems like a fact of life for many Americans. Four out of five Americans (80 percent) owe some debt. Collectively, Americans owe $14.9 trillion to banks, credit card companies, and other lenders.

There are usually two parties in debt collection cases. First, there's the party who allegedly owes money, called the “debtor.” Then, there's the party to whom the money is allegedly owed, called the “creditor.”

Often, a creditor finds they can't collect a debt from a debtor. Interest keeps piling up on the debtor’s loan, and there's no money coming in to pay it. A creditor now has two options:

  1. Collect the debt themselves. However, tracking down an alleged debtor can become more of a hassle for the lender than it's worth.
  2. Sell it to a debt collection agency. Creditors give up their right to collect the debt but still receive some money. This helps them to recoup some of their losses.

A debt collection agency is a company that buys unpaid debt from a creditor. On average, debt collection agencies buy these debts for just 4% of the original debt amount. Then, they attempt to track down a debtor and force them to pay it all back.

Let’s consider an example.

Example: Bobby owes a credit card debt of $1,000. After months of missed payments, the credit card company (aka the creditor) charges off the debt and sells it to a debt collection agency for $100. Debt collectors start calling, sending letters, and writing emails asking Bobby to pay the $1,000 he owes. They threaten to take legal action if he doesn’t. If Bobby pays off the full debt, the collectors will make a gigantic profit.


Because these companies specialize in tracking down alleged debtors, they're better suited to collecting unpaid debt than the original creditors themselves. They employ a small army of sleuths equipped with the world's best search tool: the internet. Against these odds, an alleged debtor is hopeless. Debt collection agents can track their prey using anything from bank records to voting data—even internet providers!

Luckily, you can fight debt collectors and beat them in and out of court.

Old debts can cause problems whether you pay or not

At first glance, it might make sense to just pay off a debt collection agency. After all, that's the easiest way to make them leave you alone, right?

Not exactly.

Sure, paying a debt collection agency may get them off your back. But that's all it'll do. Evidence of the unpaid debt will remain on your credit report for another seven years. The actual amount of the debt doesn't matter. Collections raise the same red flag on your credit report, regardless of whether the debt is for $100 or $100,000. This can affect your ability to secure loans in the future.

What's worse, intent doesn't matter in debt collection cases. Many debtors aren't trying to dodge their creditors. They just don't know they owe money. This happens all the time. A creditor may send an unpaid debt notice to a borrower's old address. The borrower never receives it and goes on with their lives, unaware of the debt following them.

This lingering debt can have some surprising effects, namely a damaged credit score. It'll make getting new loans more difficult. Securing financing for a car, mortgage, student loans, or home improvement is significantly more difficult with bad credit. But that's not all. Bad credit can also make it difficult to rent a home or even open an online streaming account.

On the other hand, paying an outstanding loan to a debt collection agency can hurt your credit score. Yup, you heard that right. Any action on your credit report can negatively impact your credit score, even paying back loans. If you have an outstanding loan that's a year or two old, it's better for your credit report to avoid paying it.

Protect your credit score by filing a response with SoloSuit.

How to decide if you should pay a debt collection agency

There's no “silver bullet” in a debt collection case. While ignoring a debt collector may be an option in some cases, it's not available to some debtors.

Here are some general considerations.

If you refuse to pay a debt collection agency, they may file a lawsuit against you. Debt collection lawsuits are no joke. You can't just ignore them in the hopes that they'll go away. If you receive a Complaint from a debt collector, you must respond within a time frame determined by your jurisdiction. For most areas in the US, that time frame is 14-30 days.

If a debt collection agency wins their lawsuit, they have several options available. For example, debt collectors may garnish earnings to collect a debt. A garnishment is a court order that takes money directly from a debtor's earnings. This money goes towards repaying the debt they owe. Consider this possible outcome before ignoring a debt collector's payment demands.

Here's one more thing to keep in mind. Interest on your unpaid debt will continue to pile up as time passes. If you don't pay a debt collection company, the amount of money you allegedly owe will keep increasing.

Sometimes, paying a debt collection agency makes sense. Remember, these agencies buy debt for pennies on the dollar. As a result, you may be able to negotiate paying off your debt for a much lower amount than you owe. Debt collectors may also send you a letter stating that your debt is paid. You can use this letter to remove evidence of the debt collection from your credit report.

A piece of advice: pay the right person. If you receive a letter from a debt collector demanding money, do your research. Often, debt collection agencies sell debt to one another. Don't just assume you're paying the right debt collector. Make sure your debt hasn't changed hands.

Should you pay collections? Consider these factors and situations first

Here are some more specific factors to consider if you find yourself asking, “Should I pay a debt collector?”

It may be a good idea to avoid paying a collection agency if:

  • If you have no income or property and plan to never have income or property at any point in the future. In this case, you may be “judgment proof.” If you plan to ever own anything or have income again in the future, you are not judgment proof.
  • If you don’t owe the debt. Rule #1 of life: don’t pay people money you don’t owe them. If an agency is hounding you for a debt you don’t owe, send them a Debt Validation letter to get them off your tail.
  • If it is part of your strategy to settle the debt for less. A proven strategy for paying less on a debt is to send the collector a Debt Validation Letter. This may force the collector to sue you for the debt or to give up. When they sue you for the debt, respond with an Answer to a Summons and Complaint. This may force them to give up or to settle the debt for less.
  • If the statute of limitations has expired. If the statute of limitations has expired then the collector can no longer legally sue you for the debt. Making a payment on the debt will likely reset the statute of limitations — which is disastrous.
  • If the collection agency can’t show ownership of the debt. Frequently, the sale of a debt from a creditor to a collector is sloppy. A collection agency hounding you may not be able to show they actually own your debt. If they can’t, then you aren’t obligated to pay them.
  • If you are morally opposed to paying someone other than the original creditor. As explained earlier, if a collection agency is coming after you, the original creditor may have sold your debt. Many people think it is unethical for creditors to sell debts. Also, some people argue, you don’t have an ethical obligation to pay someone other than the original creditor.

You may want to pay a collection agency if:

  • If you owe the full amount of the debt and the agency owns the debt.
  • If you want to resolve the matter as quickly as possible and have the money to do so.
  • If you believe you have a moral responsibility to pay off debts regardless of whether they are actually owed.

If a debt is sold to another company, do I have to pay?

The argument goes like this. You owed $1000 to the original creditor. The creditor sold your debt for $100 to a debt collector. If you pay $1000 to the debt collector, that doesn’t restore the creditor. Besides, the creditor already got their remedy for the debt in the $100 from the collector. Also, you don’t owe the collector $1000, because they only paid $100 for your debt. That said and the ethical argument aside, if a collector legitimately bought the debt from your creditor, you do have a legal obligation to pay, if the debt was legally assigned to the collector.

You can reach a settlement instead of paying the debt in full

For most people, it makes sense to angle for a settlement. If a collector is hounding you for a debt they are probably adding on hundreds or thousands of dollars in fees to the debt, including court fees and attorney costs. They also probably bought the debt for a small percentage of the face-value of the debt. These factors suggest that if you paid the full amount they are asking for, you would be overpaying.

On the other hand, if you don’t pay off the debt at some point, they may keep hounding you forever. Even if the statute of limitations has expired and they don’t get a judgment against you, they can still keep asking you for payment or selling your debt to the next guy till the end of time—or it ends up on the spreadsheet of some street-thug collector who threatens your life.

You can start the settlement process using SoloSettle and filing an Answer to your debt collection lawsuit. Once you pay the settlement, you’ll have documents showing the case is dismissed with prejudice and there was a full and final settlement. At that point, the debt is resolved.

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Use SoloSuit to respond to a debt collection lawsuit

If you’re being sued for a debt, whether you owe it or not, you must respond to the lawsuit or you will lose by default. When you ignore a debt collection lawsuit, the debt collector can request a default judgment to be entered into the case. If granted, the default judgment gives the debt collectors the right to garnish your wages and seize your property.

The first step to beating debt collectors in court is to respond to the lawsuit with a written Answer.

Follow these six tips to draft an Answer to a debt lawsuit:

  1. The Answer isn't the place to tell your side of the story in detail. Instead of using an elaborate story to respond to the lawsuit, your Answer should focus on responding to the claims listed in the Complaint document. Keep it simple. You can admit, deny, or deny due to lack of knowledge.
  2. Deny, deny, deny. Most attorneys recommend that you deny as many claims as possible, forcing the debt collector to do more work to prove their side of the case.
  3. Include affirmative defenses. These are any legal reasons that the debt collector should not win the case. A common affirmative defense used in debt lawsuits is the statute of limitations, which is the time period that a debt collector has to sue someone for a debt. If the debt is past the statute of limitations, then the lawsuit is void.
  4. Use standard formatting or “style”. At the head of the Answer document, be sure to include a caption where you list the court information, party information, and case number.
  5. Include a certificate of service. It's important to serve your Answer to the debt collector’s attorney. At the end of your Answer document, include a certificate of service when you verify the address you used to serve the Answer to the opposing attorney.
  6. Sign it. Most courts reject any legal documents without signatures, which is why this last step is so crucial.

In many cases, filing an Answer will stop the lawsuit from proceeding further. Sometimes, the collection agency may drop it altogether, especially if they don't have the evidence they need to prove in court that you owe the debt.

Increase your chances of winning a debt collection lawsuit by 7x with SoloSuit.

Do you have to pay a debt collector?

No, you do not have to pay a debt collector. However, failure to pay a debt can lead to serious consequences, like:

  • Legal action
  • Wage garnishment
  • Property liens
  • Endless debt collection calls
  • Decreased credit score

However, there are certain instances in which you do not have to pay a debt collector at all.

For example, if the statute of limitations on the debt has expired, the debt collector no longer has legal grounds to sue you for it. So, even if they do file a lawsuit, you’ll have a great defense in your case, and it will likely be dismissed. If that’s the case, then you’re off the hook, and you don’t have to pay the debt collector.

Another example is if the debt is invalid. Debt fraud is a very common thing, and you can request a debt validation to determine if you have to pay the collector or not. If the collector can’t validate the debt, they must cease communications with you.

This is why you should never pay a collection agency before the debt is validated and you’ve checked the statute of limitations.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James


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Join our community of over 40,000 people.

You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.


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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

What if the collection agency sues me?

If the collection agency sues you, stick to your guns: you can win. This flowchart shows you the path to victory in a debt collection lawsuit. Pre-lawsuit, make sure to send the collector a Debt Validation Letter telling them you dispute the debt and requesting validation of the debt.

If they sue you, be sure to file an Answer in court. This will make it more likely they give up and the case gets dismissed. If not, you can angle for a settlement with a Debt Lawsuit Settlement Offer Letter.

Debt Collection Lawsuit Flowchart

How does collection affect my credit score?

Having debt in collections definitely negatively impacts your credit score. Paying off the debt will likely improve your score with credit bureaus that use FICO 9 or Vantage Score 3.0 or 4.0—the newest versions of credit scoring.

Debt in collections is considered under payment history, which is the biggest factor in the most common credit score, FICO. Payment history drives 35 percent of your score.

Some lenders have special policies that prohibit them from lending to people with unpaid debts in collection.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James


Get Started


We have answers.
Join our community of over 40,000 people.

You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.


Ask a Question


>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

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