Missed a few payments? That could lead to more than late fees. If ignored long enough, your unpaid bills may land in collections. This not only adds stress but also damages your credit.

But what types of debt can go to collections? You might be surprised at how broad the list is—and how quickly it can happen.

Understanding the Risks: Which Debts Can Be Sent to Collections?

What types of debt can go to collections? Nearly any unpaid bill could eventually be turned over to a collection agency. Here are some common examples:

• Credit card balances
• Student loans
• Auto loans (especially if there’s a remaining balance after repossession)
• Personal loans
• Utility bills
• Overdrafts and unpaid bank fees
• Court-imposed fines or government-related debt
• Unpaid tuition or school-related fees
• Rent that’s overdue
• Medical bills over $500 (reported to credit bureaus)

Most creditors will attempt to collect the debt themselves first. But once the account is deemed uncollectible, it often gets sold or transferred to a third-party agency.

What Happens When Debt Enters Collections?

When payments are severely late—typically more than 120 to 180 days—your creditor may charge off the debt. This means they close your account and often sell the balance to a collection agency.

The debt then shows up as a new collection account on your credit report. Your original account will display a zero balance, but the damage to your score has begun.

At this point, you’ll begin receiving calls and letters from the collection agency. The collector may offer payment plans or settlement options to resolve the debt.

You Still Have Rights—Even in Collections

You don’t lose your consumer protections just because your debt went to collections.

You can:

• Dispute the debt in writing
• Request a validation letter within 30 days of the first contact
• Ask for an itemized breakdown of the debt
• Verify the collector’s licensing and identity
• Request no further contact (though this won’t stop legal action)

Always confirm that the debt and the collector are legitimate before agreeing to pay.

Should You Pay a Debt in Collections?

Once the account is in collections, paying it off may be the fastest path forward. But don’t rush—follow these steps first.

1. Rule Out a Scam

Ask the collector for their name, company, address, and license number. Then, verify their information through your state’s licensing board or the NMLS Consumer Access site.

2. Confirm the Debt Details

Under the Fair Debt Collection Practices Act (FDCPA), collectors must send a validation letter showing the original creditor, amount owed, and more. If it looks unfamiliar, contact your original creditor directly.

3. Create a Payoff Strategy

Paying in full is ideal—but not always realistic. You can negotiate a lump-sum settlement or request a payment plan. Make sure any agreement is one you can stick to.

If needed, speak with a nonprofit credit counselor or attorney. They can help with negotiation and ensure your rights are protected.

How Long Do Collections Stay on Your Credit?

Collection accounts—whether paid or unpaid—remain on your credit report for seven years. The clock starts on the date of the first missed payment.

Even if you pay the debt, the collection entry can still appear. However, its impact lessens over time, especially as your other credit activity improves.

Do All Collection Accounts Hurt Your Credit Score?

Not necessarily. In recent years, credit scoring models and reporting rules have changed—especially for medical debt.

Medical Collections

• Paid medical debts no longer appear on credit reports
• Debts under $500 are excluded
• Recent medical bills (less than 12 months old) are also omitted

Newer FICO and VantageScore models give less weight—or ignore—these debts entirely.

Paid Collections

FICO® Scores 9 and 10, as well as VantageScore 3.0 and 4.0, ignore paid collections. That means settling the account could improve your score over time.

Small-Dollar Debts

FICO 8, 9, and 10 ignore collections with original balances under $100. While still damaging, they may not affect every scoring model equally.

How to Prevent Accounts From Going to Collections

Avoiding collections is the best move for your credit. Here are some simple but effective strategies:

Set Reminders and Automate Payments

Missing a due date can quickly lead to bigger problems. Use reminders or automatic payments to stay current.

Monitor Your Credit Reports

Check your reports regularly for missed payments or unfamiliar accounts.
We recommend ones such as ScoreSense or Smart Credit.

Contact Creditors Early

If you’re struggling, reach out before the account becomes delinquent. Many lenders offer hardship plans or payment extensions.

Consider Credit Counseling

Nonprofit credit counselors can help organize your finances and even negotiate with creditors. They’re a great resource during financial hardship.

Be Cautious When Cosigning

If you cosign on a loan, that debt becomes your responsibility too. If the borrower misses payments, your credit could suffer—and collections could follow.

Final Thoughts

So, what types of debt can go to collections? Almost any unpaid bill can end up in collections if ignored for too long. Whether it’s a credit card balance, utility bill, or medical debt, it’s important to act quickly.

Check your credit reports regularly. Dispute errors. Verify collectors. If a debt is valid, work out a payment plan or settlement.

Over time, even the worst credit damage can be repaired. Start by taking control today.

If you ever need expert assistance or guidance on your credit journey, don’t hesitate to reach out to the Nerds! Additionally, stay updated with the latest tips and information by following us on Facebook, Instagram and TikTok!