Should You Pay Collections Accounts?

Do One Thing: To avoid potential scams, if a debt collector contacts you by phone:

• Don’t immediately acknowledge the debt
• Ask them to send proof in writing
• Only after you have proof in writing should you discuss the issue

Collection Account Stats

Millions of Americans have accumulated mountains of debt in recent years that they aren’t always able to pay off promptly.

• Data on debt shows that some 30 million U.S. adults have at least one account in collections.
• At the same time, people continue to be plagued by criminals stealing their identities and opening fraudulent credit card accounts in their names that are typically not discovered until debt collectors contact victims seeking payment.

With so many factors at play, it can all get a little confusing.   

What it Means to be in Collections

Typically, having an account in collections means you owe a debt to a lender you did not pay that has been sold to a debt collection agency. This can harm your credit score, among other issues.

When Accounts are Sent to Collections

Lenders and other creditors, including credit card companies, typically send an account to collections when payments have been late for 120 or 180 days. Unfortunately, this can also sometimes include accounts that were opened fraudulently in your name.  

A survey from June 2025 found that of U.S. adults seeking debt relief:

• Some 25% have at least one account in collections.
• Those in collections owe an average of $3,027, usually spread across two accounts.
• Many Americans looking for debt relief are close to maxing out multiple credit cards.
• People aged 36 to 50 have the highest collection balances, notes The Pew Charitable Trusts. 

Are There Collections You Should Not Pay?

The short answer here is yes. If you did not incur a debt that is listed on your credit report, don’t immediately make plans to settle up. Certified financial planner Chris Diodato, CFA, CMT, founder and CCO of WELLth Financial Planning, says he wouldn’t pay collection accounts that have a valid dispute. 

How to Handle Fraudulent Credit Card Accounts

If you discover an account has been fraudulently opened in your name, there are several steps you should take as you work to clear your good name and credit reports. 

1. Contact the creditor or lender directly and inform them of the situation. When you are on the call, ask them to close or freeze the account.
2. Place a free fraud alert (for up to a year) with the three main credit agencies: Experian, Equifax, and TransUnion. This indicates to creditors that you have been a victim of identity theft, so they need to take additional steps to confirm the identity of anyone who asks for credit in your name. Here’s the contact information:
   • Experian, call 1-888-397-3742
   • TransUnion, call 1-888-909-8872
   • Equifax, call 1-800-685-1111
3. File a report with the Federal Trade Commission and your local police department. It’s helpful to include as much detail as possible when you do this. With the FTC, you can fill out a form online at:
   • FTC. IdentityTheft.gov
   • Call 1-877-438-4338
4. Keep copies of the reports in a safe place because you will need them when you file disputes with the credit reporting agencies that have the fraudulent accounts listed on your credit reports.
5. Freeze your credit with all three agencies. You’ll need to contact each one to make the request. This is a good idea because it ensures that no new accounts can be opened in your name until you personally unfreeze your credit.  
6. Change your passwords, PINs, and logins for all of your financial accounts. Avoid reusing old passwords or pins. Be sure to save all of the new information in a secure location for safekeeping.

What Collections Accounts Should You Pay?

Honesty is the best policy when it comes to debts you are responsible for. “If there’s an account that you can look at and say, ‘yup, I incurred that debt fair and square,’” Diadato explains, “you should try to pay it or at least negotiate a settlement for less than the original amount.” 

Strategies for Dealing with Accounts in Collections

If you are dealing with a legitimate account that has been sent to collections, take heart. Then take a deep breath and tackle the issue by communicating with the debt collector. Avoiding the issue won’t make it go away and could ultimately result in a court appearance. Consider these tips as you work toward clearing the debt:

• Negotiate Settlements. Since debt collectors often buy debt for pennies on the dollar, you can try to negotiate a plan to pay a fraction of the total owed, starting at 20%. So if you owe $2,000, you could initially offer to pay $400 to settle the debt.
• Don’t Acknowledge Responsibility. As mentioned previously, do not say or write anything to acknowledge the debt is yours until it has been verified. This can restart the statute of limitations on the debt.
• Get it in Writing. Never pay or agree to a payment plan without first getting the agreement in writing.