Sending Someone to Collections Without Notice: Is That Legal?

When you owe money to a creditor and fall behind on your payments, the creditor will probably send you a series of notices asking you to get caught up. The creditor may also call you. If don’t pay the full amount that you owe right away, or if you and the creditor are unable to agree on another way for you to pay what you owe, each new communication you receive from the creditor will be more serious-sounding than the last. Meanwhile, as long as your debt remains past due, the amount you owe will grow because of interest and late charges. And the longer it goes unpaid, the more damage the debt will do to your credit history, which means that your credit score will suffer.

How long before a bill is sent to collections?

Eventually, if you don’t clear up your unpaid debt, the creditor will probably run out of patience and turn it over to a debt collection agency. And once that happens, you’ll start receiving calls and letters from debt collectors who work for the agency and your credit history and credit score will take an even bigger hit.

Creditors may have to follow banking regulations that require them to charge off debts when they become 120 days past due. For revolving accounts, such as credit cards, regulated financial institutions generally have to charge off delinquent debts when they are 180 generally must charge them off. (Medical bills may follow different rules.) When a debt is charged off, it doesn’t go away. Instead it will usually be assigned or sold to a collection agency.

Sometimes a creditor will send you to collections without prior notice. Is that legal you may ask? Yes, it is because most creditors have no legal obligation to give you a heads-up before they send your past due account to collections. The Fair Debt Collection Practices Act (FDCA) for example, the federal law that establishes consumers’ rights when they are dealing with debt collectors and says what debt collectors can and cannot do to collect a debt, generally doesn’t apply to creditors and it does not require debt collectors to disclose their collection plans to consumers. However, it’s possible that your state may have its own law that does require prior notification. To find out if your state is one of them, contact the office of your state attorney general or get in touch with a consumer law attorney in your area that handles debt collection cases.

Warning: Your past due account may be sent to collections without an upfront notice even if you’ve been paying on it.

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How Can I Avoid Having a Debt Sent to Collections?

Obviously, the best way to avoid falling behind on a debt and having it sent to collections is to never owe more than you can afford to repay and to pay your bills on time. Realistically however, we understand that you may be unable to follow this advice, maybe because of an unexpected job loss, medical expenses, a costly emergency, or some other problem.

It’s important to have a clear understanding of what you should do if you know that you are going to be unable to pay a debt or even if you’ve already fallen behind on it. Being proactive is your best strategy. In other words, get in touch with the creditor and try to resolve your situation as quickly as possible. In other words, don’t ignore the notices and calls you receive from a creditor and hope that eventually it will forget about you. That’s unlikely to happen, especially if you owe the creditor a lot of money. More often than not, “burying your head in the sand” will make your situation worse.

When you contact a creditor, explain that you really want to pay what you owe, but you can’t right now because of X, Y or Z problem. Then find out whether the creditor would consider:

  • Allowing you to make interest-only payments on the debt for a specified period of time.
  • Agreeing to a new debt payment plan that would allow you to reduce your monthly payments to an amount you can afford.
  • Letting you settle your debt for less than the full amount that you owe. If you and the creditor are able to agree on a debt settlement amount, you may have to pay it in a lump sum, however. A creditor may agree to debt settlement so that it does not have to pay money to a debt collection agency to collect what you owe.

If you and the creditor are able to work things out, don’t pay any money until you have the terms of your agreement in writing. Also, before you discuss a possible payment option, be sure you know exactly how much you can afford to pay given your current monthly income and financial obligations. Never agree to pay more than you are sure that you can actually afford!

Tip. If you realize that you are not going to be able to keep up with the terms of your new payment arrangement, contact the creditor immediately. The creditor might be willing to renegotiate the terms of your arrangement, especially if you have lived up to what you promised until now. This is very important advice because if you ignore the fact that you have fallen behind on your agreement, the creditor is likely to send your account to collections immediately.

Filing for consumer bankruptcy may be another option to consider, especially if you have a lot of debt, you cannot work out alternative payment arrangements with your creditors and you are at risk for losing assets that you want to hold on to.

Depending on the kind of bankruptcy you file, the bankruptcy court will either wipe out all of your unsecured debts (credit card debt, for example) but you may lose some assets, or the court will approve a reorganization of your debt. This would involve putting together a written plan that lowers your monthly payments, gives you more time to pay what you owe, and helps you hold on to your assets.

Meet with a consumer bankruptcy attorney to find out whether filing for bankruptcy is a good option for you, and which kind of bankruptcy would be best for you given the details of your financial situation.

You can call the Debt Collection Hotline at 1-888-495-0133 to be referred to a bankruptcy attorney now.

Can I pay my original creditor instead of the collection agency?

Possibly. If a debt was just sent to collections you may be able to contact the creditor or company that sent you to collections and ask them to “pull the account back” from collections. If the debt was sent to collections some time ago, you are not likely to have any luck with this approach. And if the debt has been sold to the collection agency, you’re also likely out of luck.

Can I be sent to collections without receiving a bill?

Possibly. There is no specific provision in the Fair Debt Collection Practices Act that prohibits this. There may be state laws that apply to a specific situation, however. If you have a legitimate billing dispute with a company that sent you to collections and you can’t resolve it you may want to contact a consumer law attorney to find out if you have a case against the company or collection agency.


Learn how to get free or low cost legal help to put your debt collection problems behind you. 

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