Will Any Payment on Debt Prevent Debt Collectors?

A payment on a debt can prevent debt collectors from taking further action against you, such as the filing of a lawsuit. Debt lawsuits can lead to court judgments and garnishment of your bank account or wages. Instead of ignoring debt collectors, communicate with them about your situation and negotiate a payment arrangement that you can afford.

Default Judgments

Ignoring debt collectors and legal notices can result in a so-called "default judgment" in civil court. A default judgment is a legal decision signed by a judge after you fail to show up in court to respond to a lawsuit. In a debt lawsuit, the judgment orders you to pay a specific amount of money to a debt collector.

Bank Garnishment

Bank garnishment allows debt collectors to freeze your bank account while withdrawing money to satisfy a judgment. A judge can sign a garnishment order after granting a judgment against you. While the account is frozen you are not allowed to use it except to deposit money. Garnishment is so challenging that some people are forced into bankruptcy, which lifts the garnishment order and releases the bank account.

Negotiating Debt

Making one partial payment to a debt collector isn't going to end the collections process. Before contacting the debt collector you should create an overall strategy for resolving the debt. Settling the debt for less than the full amount owed---a process called debt settlement---is one strategy. The SmartMoney website reports that debt collectors will sometimes settle bad debts for 20 to 75 percent of the balance. Debt collectors can afford to offer the discount because they often purchase bad debts from original creditors for pennies on the dollar. A $5,000 credit card debt that you defaulted on may have been purchased by the debt collector for $500---or less.

Making An Offer

A debt can be settled in a lump sum or in installments. If you're not ready to settle now, tell the debt collector you would like to make regular monthly payments as a show of good faith. Then when you have enough money to settle, call the debt collector to begin negotiations. By making regular monthly payments and staying in touch, it's likely that the debt collector will hold off on further collection efforts.