It only takes one serious financial setback — whether it’s a layoff, a medical issue or an unexpected major expense — to suddenly find yourself behind on bills. After all, life can throw curveballs that make it difficult to keep up with your expenses, even if you’ve been responsible with your money. In these situations, many people will prioritize their essential expenses, like mortgage or rent payments, over other financial obligations, such as their credit card bills, for understandable reasons. After all, paying for shelter and basic needs comes before handling high-interest debt.

Unfortunately, while this approach might work initially, delinquent credit card debt can become a major financial strain over time. Late fees, penalty APRs and accumulated interest can make the debt snowball, and if you’re unable to catch up on missed credit card payments over the long term, there’s a good chance your debt will eventually be sold to a third-party debt collector. This often marks the start of a new, more challenging phase in dealing with the debt, as debt collectors have a different set of tools and motivations when it comes to recouping what you owe.

So, what exactly can a debt collector do if you can’t pay your old credit card debt? Understanding what’s permissible can help you prepare for the steps debt collectors might take if you’re struggling to pay off your old credit card debt.

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What will a debt collector do if I can’t pay old credit card debt?

If your old credit card debt has been sold to a debt collector, the collection agency’s first approach is often to make contact and discuss payment options. This process usually begins with letters and phone calls that urge you to settle the debt in some way, whether through partial payments or a lump-sum arrangement. 

While these contacts may feel persistent, debt collectors are required by law to follow the Fair Debt Collection Practices Act (FDCPA), which protects consumers from harassment, excessive calls and abusive language. If a debt collector crosses these boundaries, you have the right to file a complaint with the Consumer Financial Protection Bureau (CFPB).

If the initial outreach doesn’t result in payment, the debt collector may try to negotiate even further on the settlement amount. Because they typically acquire the debt for a fraction of its original value, many debt collectors are willing to accept a lower payment than they initially offered, which can work in your favor. In these cases, they may even suggest a payment plan that breaks the debt into smaller, manageable installments.

However, if you are still unable to make payments or come to an agreement at that point, the debt collector might take more serious steps. This can include filing a lawsuit to collect on the debt. If they decide to pursue legal action, you would be served with a court summons, requiring you to appear and respond. 

If you ignore the lawsuit, a default judgment could be entered against you in the debt collector’s favor, allowing the debt collector to pursue wage garnishment, liens on your property or even bank account levies. That’s why it’s important to respond to any court summons you receive, as failure to do so can lead to outcomes that are harder to reverse.

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What other options do I have?

If you’re unable to pay off your old credit card debt, it’s important to know that there are options beyond simply hoping the debt will disappear. Here are some common debt relief strategies that could help you regain control of your finances:

• Debt forgiveness (or debt settlement): With debt forgiveness, you negotiate with creditors or collectors to pay less than the total amount you owe. This is typically done through a debt relief company, but you can also try negotiating on your own. 
• Debt management: Offered through credit counseling agencies, debt management plans involve working with creditors to lower interest rates and waive fees, making the debt more manageable. This plan usually lasts three to five years and can provide structure for paying off debt.
• Debt consolidation: If you have a decent credit score, you may qualify for a debt consolidation loan, which rolls multiple debts into a single loan with a fixed interest rate. This can simplify payments and potentially reduce interest costs. 
• Bankruptcy: For those in severe financial distress, bankruptcy may be an option. Chapter 7 bankruptcy discharges most unsecured debts, including credit card balances. Chapter 13 bankruptcy, on the other hand, allows you to repay your debts over a three- to five-year period under a court-approved plan.

The bottom line

Falling behind on credit card payments can feel overwhelming, especially when a debt collector gets involved. However, understanding your rights and the steps a debt collector can take can help alleviate some of the stress. While debt collectors have various methods for recovering funds, they are limited by laws designed to protect consumers from harassment and unfair practices. If you’re struggling with debt, you should also explore your debt relief options. Each comes with its own pros and cons, but taking action can help you regain control and move closer to financial stability.