Just hearing the word “collections” can make your stomach drop. It feels like a point of no return—like something big and scary is looming. But here’s the truth: while it’s serious, it’s not the end of the road.
Collections Doesn’t Mean It’s Too Late
When you find out your debt has been sent to collections, panic is a natural reaction. You might imagine nonstop phone calls, damage to your credit, or even legal action. And while some of those concerns are valid, they don’t tell the whole story.
What’s actually happening is more procedural than personal. It doesn’t mean you’ve failed. It doesn’t mean you’re out of options. And it definitely doesn’t mean it’s too late to do something about it.
This blog will walk you through what it really means when a debt goes to collections, how it might affect you, and what you can do—without jumping to worst-case scenarios.
What It Means for a Debt to “Go to Collections”
When a debt “goes to collections,” it means the original creditor has decided they need help recovering the balance—usually after 90 to 180 days of non-payment.
At that point, one of two things happens:
- The creditor outsources the debt to a collection agency—they still own it, but someone else is contacting you.
- The creditor sells the debt to a third party—the agency now owns it and collects on their own behalf.
There’s also a difference between internal collections (a department within the original company) and external collections (a third-party agency).
And not all collections are created equal. If the debt comes from a subrogation claim—like an insurance company seeking repayment after an accident—it’s not considered “consumer debt.” These debts fall outside the Fair Debt Collection Practices Act (FDCPA) and follow a different process.
Knowing who’s collecting and what type of debt it is can help you determine your rights and your next step.
What a Collection Agency Can and Can’t Do
Once your debt is in collections, it’s common to receive more communication. That might look like:
What They Can Do
- Send letters
- Call, email, or text you
- Offer payment plans or settlements
While this outreach can feel intense, it’s often just the agency trying to open a dialogue—not scare you into paying.
What They Can’t Do (Under the FDCPA)
If your debt is considered consumer debt (credit cards, medical bills, utilities), it’s covered by the FDCPA. That means collectors:
- Can’t harass or threaten you
- Can’t call before 8 a.m. or after 9 p.m.
- Can’t misrepresent who they are or what you owe
You have the right to file a complaint if any of those lines are crossed.
However, if the debt is related to a subrogation claim, those FDCPA protections likely don’t apply. Even so, every borrower deserves to be treated respectfully.
Keep written records of all communication, ask questions when needed, and don’t hesitate to push for clarity. You don’t have to be ready to pay in full to engage in the conversation.
What You Should Do if Your Debt Goes to Collections
If you’ve found out your debt has been sent to collections, it’s easy to feel frozen or hope it just disappears. But ignoring it usually makes things more complicated. The good news? You don’t have to tackle everything at once—just take it one step at a time.
Start by opening the letter or answering the call
Avoiding contact might feel easier in the moment, but staying informed gives you more control. Reading the letter or hearing what the agency has to say doesn’t mean you’re agreeing to anything—it just means you’re getting the full picture.
Request validation if something doesn’t look right
If the debt feels unfamiliar or the amount seems off, ask for a validation letter. This is your right, and it ensures the agency can prove the debt is real and that they’re authorized to collect it.
Keep communication in writing
Whenever possible, communicate by email or letter. That way, you’ll have a clear record of everything that’s been said, which can be helpful if questions or concerns come up later.
Ask about your options
If the debt is valid, don’t be afraid to explore what’s available. Many agencies are open to payment plans, settlements, or temporary pauses—especially if you’re facing financial hardship. You won’t know what’s possible until you ask.
Collections Isn’t the End—It’s a Turning Point
Having a debt in collections can feel overwhelming, but it’s not a dead end. It’s a phase—one that can be navigated with the right steps and a little support.
Taking action, even if it’s just asking a question or opening the letter, can make a real difference.
You don’t have to face it alone. If your debt is in collections, reach out. We’re here to talk through your options and help you find a path forward.
