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When you’re trying to conquer unpaid debts sent to collections, two of the biggest obstacles you face are coming up with enough money to pay off the debt and negotiating a payment plan or settlement you can afford. Once you’ve accomplished these tasks, you may still be wondering how you pay collections to a debt collection agency.

Familiarize yourself with the steps for how to pay collections before you take the plunge and submit your payment.

1. Verify the Debt

Before you make any payments or acknowledge ownership of the debt, make sure you actually owe the debt and that it’s not outside the statute of limitations. In this era of debt collection scams, also verify that the debt collection agency actually exists and you’re not being targeted by a scam. Ask for verification of the debt in writing and verify with your state attorney general’s office or the Better Business Bureau that the collection agency is legitimate.

You can also collect information to validate the debt by checking your credit report each year and monitoring your credit score for suspicious activities or inquiries for free at

2. Know Your Rights

“When dealing with debt collectors, many experts always look to the Fair Debt Collection Practices Act,” warns financial consultant Damon Day. “I agree it’s important to know what collectors can and can’t do.”

If your debt goes into collection, it’s imperative you know your debt validation rights:

  • Debt collectors must provide a written notice explaining the debt, including the amount, the name of the creditor and your right to dispute the debt.
  • Debt collectors may not harass, threaten, or mislead you.
  • Debt collectors cannot publish your personal information, use profane language, or repeatedly call you.
  • Debt collectors cannot contact other people about your debts more than once.
  • Unless specifically requested otherwise, debt collectors can only call between 8 a.m. and 9 p.m.
  • Debt collectors may not call you at work if you ask them not to.
  • If your attorney is handling your debts and you have told a collector to speak only to them, they cannot contact you directly.

Your debt collection rights also limit who collectors can talk to you about the debt. Debt collectors can speak to you, your spouse and your attorney, if you have one. They can’t discuss your debt with your family members, friends or employers and can only call them once to locate you. There is also a statute of limitations for how long collection agencies are able to pursue legal action against you.

3. Determine What You Can Afford to Pay

Starting a budget can help you understand what you can afford to pay each month. Go over your income and expenses to come up with a realistic amount you can pay over a specific time period.

4. Negotiate a Settlement

When you can’t afford to pay a balance in full, don’t be afraid to negotiate a settlement with a debt collector to reduce the amount you must repay. Successful negotiations may include these steps:

  • Explain your current money situation without getting too specific.
  • Start negotiations by offering a payment lower than what you are willing to pay.
  • Get a counteroffer from the collector and go through several rounds of offers before reaching an agreement.
  • Obtain all settlement details in writing before submitting any payment.

Your goal is to get the debt collector to agree to an amount less than or equal to what you decided you can afford to pay. However, some collectors may refuse to negotiate and will demand you pay the debt in full. Don’t let a debt collector bully you into paying an amount you can’t afford or that causes you to let your other financial obligations slide.

5. Make Your Payment

Once a debt collector sends you a written agreement with the total amount you’ve agreed to pay, review it carefully for accuracy before you take the final step of submitting your payment. When you make your payment, avoid giving your bank account or debit card information to the collection agency. Instead, pay with a money order or certified check, if possible.

6. Document Everything

Document your payment thoroughly, including sending it through certified mail with a signature required on the return receipt. Follow up with the collection agency to ensure your payment was credited to your account, and check your credit reports with the credit bureaus to confirm the debt is no longer being reported as outstanding.

How Do You Pay Off Medical Debt in Collections?

Paying off medical debt is similar to paying off any other type of debt, but there’s generally more room to negotiate the terms of repayment and a reduction of your debt. Some medical providers let you pay for “financial aid” or an in-house payment plan so you can keep the debt from going into collections and damaging your credit. Other ways to pay off your medical debt include the following:

  • Pursue payment plans offered by many medical providers.
  • Apply for medical credit cards for specific procedures.
  • Hire a medical bill advocate to negotiate on your behalf.
  • Apply for an income-driven hardship plan.
  • Seek nonprofit organizations that help pay off medical debt.

If you have a verifiable hardship, such as a disability that prevents you from working, you may also be able to pursue medical bill forgiveness. Your medical provider will need your tax returns and other written documentation that proves you have no means to pay your medical debt.

How Should You Pay a Collection Agency?

There are several options when it comes to how you should pay a collection agency, including paying with your bank account, credit card or debit card, or paying with a prepaid debit card, money order or cashier’s check. However, some payment methods are riskier than others, and most experts agree you should avoid giving your bank account or debit card information to a debt collector.

Bank Account Draft/ACH

Most debt collectors ask for your checking account information so they can take your payments right out of your account. It’s a convenient option that typically costs you nothing, but it’s not always a safe payment method. The general consensus is to avoid giving your bank account information to a debt collector, unless you’ve set up a separate account specifically for this purpose.

“Never pay this way,” says Mike Arman, a retired mortgage broker. “Auto debit is permission to access your account whenever they feel like it and then say ‘Oh, we made a mistake’—and do you think you’re getting any money back? They can also come back later for more, whether by ‘accident’ or design.”

Personal Check

Mailing a personal check is a cheap payment option, and you have the canceled check as proof of payment, but it’s not very fast. For this reason, it’s not usually at the top of the list for preferred payment methods by debt collectors. Plus, you’re giving your checking account information to the collector, which may be bad news for you. Avoid using a personal check, unless it comes from a separate account set up to pay the debt collector.

Alternatively, you can use your financial institution’s online bill pay service. Gregory B. Meyer Community Relations Manager at Meriwest Credit Union explains, “Your online banking sends them a check that’s basically guaranteed funds like a cashier’s check, but your personal info, like your account number, doesn’t show on it.”

Postdated Check

Under the Fair Debt Collection Practices Act, debt collectors aren’t supposed to deposit postdated checks before the date on the check—or even threaten to do so. If a collection agency accepts a postdated check that’s dated more than five days in the future, it’s also supposed to notify you in writing 3 to 10 business days before depositing it. However, not all debt collectors follow these rules, so it’s best to avoid postdated checks.

“Collectors will say that sending postdated checks is part of the terms. It’s not true and you can negotiate that,” says Leslie Tayne, a New York attorney who specializes in consumer debt resolution.

Debit Card

The general advice when it comes to debit cards is the same as paying with bank account drafts or ACH payments: avoid it. Debit cards access funds in your checking account, so it still gives the collector access to this account. If the amount charged to your debit card is wrong or if there are multiple withdrawals when you only agreed to one, you must fight the debt collector to get the money returned to your account. Although you’re generally protected against unauthorized withdrawals under the Electronic Funds Transfer Act, it may be difficult to prove the amount wasn’t approved since you gave the debt collector your debit card information.

Credit Card

Paying a debt collector with a credit card doesn’t make the debt go away. Instead, you create a new debt and additional finance charges, so most advisers will say to never use credit cards to pay debt collectors.

“Paying one debt off while racking up new debt is an oxymoron in itself,” warns Howard Dvorkin, founder of Consolidated Credit Counseling Services. “If a person truly finds themselves in a financial situation where they’re borrowing from Paul to pay Peter, they need to reach out for help.”

Prepaid Card

Any collection agency that accepts debit or credit cards can accept a prepaid card. You simply load money onto the card and give the collector your card number. The card isn’t tied to your bank account, so your personal information remains private. Most prepaid cards allow you to spend only what’s loaded onto the card, so you don’t have to worry about overdraft charges or the debt collector pulling more money from your account, as long as you only load what you plan to pay.

Prepaid cards solely used to pay a debt collector are a relatively safe alternative, but make sure to look for a low-fee card and keep a record of your payment. Also, watch out for debt collection scammers who instruct targets to load money onto a prepaid card then mail the card to them. This allows scammers to be paid with virtually untraceable funds, and refunds are impossible.

Law Office Check

If you have an attorney handling your case, one of the safest ways to pay collections is to have them do it for you. “Pay your attorney and have your attorney send them a law office check,” suggests Arman. “Even the dumbest bill collector knows better than to screw around with a check drawn on ‘The Law Office of . . . ‘. There’s also an unassailable audit trail, and the bill collector never gets ANY of your account information.”

Money Transfer

Debt collectors like money transfers from services like Western Union or MoneyGram or wire transfers directly from your bank or credit union account to the collector’s account because they get paid quickly. However, a money transfer can be expensive, and it’s difficult to confirm whether the debt collector received payment. It’s also a potentially risky payment method because money transfers are the preferred payment method for scammers, warns the Federal Trade Commission. It’s like sending cash, and you can’t get it back because there’s typically no way to reverse a transfer or trace the money.

Money Order

Money orders are relatively inexpensive and can be purchased at a post office, bank or credit union and most convenience stores and grocery stores. On the downside, it’s difficult to prove a collection agency cashed the money order you sent. It’s a cheap payment method that helps you maintain financial privacy, but make sure you keep your money order receipt and proof of delivery in case the collector says you didn’t pay. A similar alternative is a cashier’s check  These cost a bit more than money orders, but they’re easier to prove payment.


While it’s uncommon for debt collectors to accept PayPal to collect on a debt, it’s possible a collector would allow this payment method. PayPal is likely safer than letting a debt collector take money from your bank account, but transfers could take several days and there may be fees involved the collector makes you pay.

Should You Pay Off Collections?

You should pay off collections to avoid hurting your credit score and having to deal with wage garnishments or bank account levies. An outstanding collection account lowers your FICO credit score and stays on your credit report for seven years from the date of delinquency. This can hurt you even if you’re not trying to borrow money. For example, if you’re seeking new employment, being considered for a promotion, trying to rent an apartment or applying for or renewing your insurance, a longstanding unpaid account on your credit report could make you appear untrustworthy and negatively impact all these situations.

Create a Debt Payment Plan

While debt collectors aren’t required to accept a payment plan, they can be a great way to get a debt paid off. Keep in mind that making any kind of payment arrangement with a debt collector can restart the statute of limitations on your debt, and this time limit varies by state. Create a payment plan that reflects what you can realistically pay by setting up a budget. Based on how much you can afford to pay, you can set up one of the following:

  • A short-term payment plan that lets you pay off the debt in a set number of months.
  • A lump-sum payment plan that’s scheduled for a specific date.
  • A partnership with a debt management company to arrange one monthly payment to be distributed amongst your creditors.

More Tips for How to Pay Collections

1. Don’t Cave to Pressure

Some debt collectors may tell you that you have to use the payment method they prefer and use high-pressure tactics, such as threatening to mark you down as “refusing to pay” if you won’t. It’s not illegal to refuse to use any payment method, so stand firm if you need time to figure out how to pay.

2. Keep Good Records

“Regardless of payment method, consumers should always keep documentation of their payment,” says Mark Schiffman, Director of Public Affairs for the credit and collection industry trade group ACA International. “Keep these records in a place you can access them easily and indefinitely. Debts sometimes resurface years later.”

3. Negotiate Fees

“Watch for fees related to payments,” says Tayne. “Find out if there’s a check by phone fee or other fees related to a particular payment method. If so, ask for it to be waived.”

4. Follow Up

“I cannot stress this more: make sure the payment was entered correctly or received,” says Tayne. “There are so many times when the person taking the payment makes a mistake, and the payment doesn’t go through. Make sure all payments are received, applied and the settlement is still valid.”

How Long Does It Take for a Paid Collection to Come Off Your Credit Report?

Even when you pay a collection account, it generally still doesn’t come off your credit report for seven years. However, with a little pushing, you may convince the debt collection agency to contact the three credit bureaus and remove the collection account earlier.

If you’re unsure of what’s on your report, sign up for’s free Credit Report Card to track your credit. Receive the latest tips and advice from credit and money experts, an easy-to-understand breakdown of your credit report information and a free credit score and action plan.

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