What You Need to Know About Unpaid Debts

by Emily Guy Birken · 6 comments

While we all know that leaving a debt unpaid can have serious financial consequences — from seeing your credit score lowered to having to deal with collection agencies — you may be surprised to learn what collection agencies and creditors will try to do in order to get you to pay. If you are struggling with debt, make sure you know your rights and what you can expect from the most tenacious of collections agencies:

The Fair Debt Collection Practices Act (FDCPA)

The FDCPA is in place to protect debtors from abusive practices in the name of collecting a debt. Basically, this law guarantees that debtors will not have to deal with phone calls at all hours, phone calls at work after letting the collector know that it is prohibited by the debtor’s employer, or telling any third party other than a spouse or attorney about the debt.

Despite the protections offered by this law, collections agents will often try to get around the rules in a variety of ways.

Using Social Media


One such work-around that collections agents are exploring is using social media in order to contact debtors. According to John Ulzheimer of creditsesame.com, “one of the primary challenges in the debt collection industry is simply finding the debtor so they can ask them to pay the account… [Facebook and LinkedIn] provide a method to privately contact the consumer via the messaging functions on those sites.”

This is a somewhat sticky situation, because the FDCPA does not specifically mention social media, either as fair to use or not. And though collections agents are required to state that they are with a collections agency when they contact a debtor via phone or mail, there is no such requirement if they are simply monitoring your social media use — which they can only do if you accept their friend request.

The simple way to protect yourself is to make certain that you do not accept any friend requests from individuals you don’t personally know.

Using the Court System

Though debtors’ prisons have been outlawed in the United States since the 1830s, there are still states where you can find yourself behind bars because of non-payment of debts. While a debtor cannot legally be arrested for not paying their debts, they can be charged with failing to respond to a court summons or hearing, or failing to pay a legal financial obligation, which can happen if a collections agency or creditor decides to sue the debtor for the unpaid amount.

So while it’s not technically possible for a debtor to go to prison because of unpaid bills, creditors can use the court system to get their money, which can potentially land a debtor in jail.

According to a 2010 ACLU study that looked at only five states — Georgia, Louisiana, Michigan, Ohio, and Washington — individuals are “being jailed at increasingly alarming rates over legal debts.”

Only about a third of states allow police to get involved in unpaid debts. However, it is very important to make certain you read and understand all of your correspondence from your creditors if you owe money. You will not be vulnerable to legal loopholes that could land you in prison if you make certain that you respond appropriately to all correspondence.

The Bottom Line

Ultimately, creditors simply want to get paid. If you are in dire financial straits, try talking with your creditors—or even collections agents—to figure out a way to stay afloat while you are attempting to pay them back. They would prefer to work with you because it means they’ll see their money sooner, and you won’t have to worry every time the phone rings.

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  • Herbert says:

    I had my ID stolen several years ago, and, without a doubt, the worst ongoing result of this is having to deal with debt collectors. To this day, they still call. There has only been one company that actually treated me with a little dignity, and responded to my situation with alacrity. The rest, bar none, will continue to harass, even after provided with proof like police reports of the crime, etc. I was recently told that even though my dispute was valid, if I went ahead and paid the bogus claim, it would help me to recover my credit. This, of course, was a lie, the damage already being done. My latest horror story concerns a company that recently purchased one of these old accounts for collection. They reported it to the credit bureaus as current, thus further preventing any hope of my getting an inventory loan for my business, which I sorely need. When I finally got them on the phone, explaining the whole story, and faxing information about it all, they did absolutely nothing. As I was pleading that this looks like I just reneged on a new debt, which was never mine several years ago in the first place, that lady was sneering when she informed me that LEGALLY it was a new account to them, and they could date it whenever they wanted to. As this was going on, I had actually raised one of my scores to over 700. I was within a heartbeat of recovering from the ID theft. The score is down again, no hope of getting credit. Does anyone know of actual people who loan money after hearing actual histories of the why, and not the computer decision alone?

  • Juan says:

    At the end of the day, I wouldnt feel too bad about having a few un collected debts.

  • david says:

    I have often felt that debt collection is a kind of scam. This is especially true in regards to credit card debt. The creditor lent the credit on a ‘signature’ that means they do not require collateral.

    What CC companies do is write the bad debt off their taxes (which means they dervived a financial benefit. THEN, they turn the debt over to collection agencies who actually ‘buy’ the records of the debt.

    It is arguable that they do not have a right to collect these debts because the original organization obtained a financial benefit. In addition, there was no collateral being held. Last, the debt company ‘purchased’ the debt for pennies on the dollar.

    Of course, you should not blindly trust what was written here, be sure to check with an attorney before you take any action regarding your financial issues.

    • Smithton says:

      They actually sell the debt and write off the deficiency. The debt buyer then becomes the new creditor and has the legal right to collect it, all of it. That’s why they often accept settlements on the debts, because of the huge margin.

  • Marbella says:

    The most important thing if you have unpaid debts is to try to engage in dialogue with creditors owner of the debt before it goes too far and creditors owner can not stop with recovery process.

  • Blue Spyder says:

    I had to deal with a creditor who lied and said he was gonna garnish my wages and bank accounts not too long ago. Luckily, when he sent the notice to my job they forwarded it to the legal department and they sent him the Florida law that states I can’t be garnished or attached.

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