Can You Refuse To Pay A Debt Collection Agency?

Debt collection agencies are third parties hired by creditors and lenders to recover borrowers’ debts and other monetary values. If your debt has been sent to a collection agency, they will try to contact you to recover the money. If you ignore the debt collection agency, there might be some consequences.

Consequences Of Refusing To Pay Debt

1. Being Chased By A Collection Agency

In most cases, the collection agencies can only make a profit if they collect the debt, which is why they will try everything they can to recover payments from you. They can also send you reminders through text messages, emails, and the phone. Of course, there are limits to what the debt agency can do; however, that depends on many factors, including the type of debt you owe.

2. Interest Rates Can Spike

An unfavorable outcome of refusing to pay debt collectors is that your interest rates on the debt can increase. If the original payment, credit, or loan agreement allows an increase in the cost of debt or interest rates, the amount you owe the lender or creditor can increase exponentially.

3. Impact On Your Credit Report

Typically when you are delinquent on paying your debt or have defaulted, your debt is sent to a collection agency. This can severely impact your credit score, which is important for any loan, such as a mortgage or credit card.

4. Collectors Can Sue You

Ignoring the collection agency could result in your getting sued by them. When a lawsuit is filed against you by the collection agency, you may be required to appear in court. Failing to appear in court could result in the court permitting the collection agency to either garnish your income or place a lien on the property you own. In some cases, an arrest warrant can be issued if you fail to appear in court.

What Happens If My Debt Is Time-Barred?

When the statute of limitations for collecting a debt expires, it is referred to as time-barred debt. Debt collectors, lenders, and creditors cannot sue the debtor if a debt is time-barred.

While you may not get sued after the statute of limitations for debt collection expires, you can still end up with a negative credit score, which is why you should pay off your debt on time.

Read Also: 3 Questions to Ask Before Consolidating Your Debts

Paying Back The Debt

Before you settle on a debt settlement or file for bankruptcy, you can consider a debt management plan. A debt management plan can help you pay back your debt in full based on your income or financial circumstances.

According to Atlantic Recovery Solutions, no debt collection agency can legally harass the client. If you feel that you are being harassed by a debt collection agency, you can contact an attorney to guide you on your legal options.

When Can I Refuse To Pay A Collection Agency?

You can refuse to pay the debt collection agency under a few conditions, such as the following:

• You are Judgement Proof: If you do not have any cash reserves, stable means of income, or additional property and assets that the debt collector can seize to pay off what you owe, then you might be judgment proof. This means that the debt collection agency cannot collect anything from you.
• Debt Has Been Time-Barred: You may not have to pay the collection agency for debts past the statute of limitations.
• You Are Incapacitated: You have suffered from an injury or disability that makes you permanently or temporarily unable to pay the collection agency.

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