Here's what will (and won't) happen when your debt goes to collections
Summary
A debt sent to collections can lead to contact from a collection agency, but it does not automatically trigger a lawsuit or wage garnishment. Federal rules generally require collectors to provide information about the debt, and consumers usually have 30 days after receiving validation information to dispute it in writing.Key Facts
- People may receive calls, letters, emails or text messages from a collection agency or debt buyer after an account enters collections.
- Collectors generally must provide a validation notice during their first communication or within five days afterward.
- The validation notice includes the amount owed, the creditor’s name and information about how to dispute the debt.
- Consumers generally have 30 days after receiving validation information to dispute the debt in writing.
- A timely written dispute generally requires the collector to pause collection activity on the disputed debt until it provides verification.
- For most ordinary consumer debts, collectors must sue and obtain a court judgment before they can pursue wage garnishment.
- Some federal student loans and government debts can follow different rules for collection.
- In a Freedom Debt Relief survey of consumers with more than $10,000 in unsecured debt, 36% of Gen Z respondents and 34% of millennial respondents said they could consistently make only minimum monthly payments.
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