What happens if you don’t pay the debt collector?

If you don’t pay a debt collector, the items below may or may not be taken. It depends, honestly. How much debt you owe, who you owe, and whether the debt is unsecured or not—all are factors that can lead to repossession of money or property.

5 things debt collectors might take

Bank account

Well, not the whole thing. But debt collectors can access your account through a process called “garnishment” (and no, we don’t mean parsley). When your debt goes unpaid, a creditor or debt collector can get a court order to freeze your bank account and pull out money to cover the debt.

The amount of money that can be taken depends on the debt you owe and where you live. States like Delaware don’t allow for bank account garnishment. Others, like New York, protect anywhere between $2,664 to $3,600 of a consumer’s bank account from garnishment.

Wages

Can a debt collector garnish your wages? Well, similar to your bank account, if you owe a significant amount of debt, your wages may be garnished too (no, not with chives either). Most debts require a court order to be garnished. And certain federal benefits are protected, such as Social Security, Veterans, Supplemental Security Income, and others, as long as they were Direct Deposited into your account.

House

Debt collectors can’t just come and take your house. Namely because it’s too big to carry. HOWEVER. A creditor whose loan is secured by your house can foreclose on the loan and take the property. Basically, they want to force you to sell your house to pay back what you owe.

HOWEVER. It’s costly to do so. And forcing foreclosure may have the consumer filing for bankruptcy, which means the debt collector won't get the amount of money they’re looking for. Because of this, it’s not common for debt collectors to force your house into foreclosure. But it does happen.

Car

If you default on a loan that was used to purchase a car, then collectors can repossess the vehicle. If you don’t pay, collectors don’t need a court order to take your vehicle. This is because, when it comes to car loans, the car itself is collateral.

Life insurance death benefits

Wait, can creditors take life insurance proceeds? Maybe. Look, creditors can’t just take the money listed for beneficiaries of a life insurance policy. That’s because the money is designated solely to go to the beneficiary. HOWEVER. If your beneficiary receives a policy payout and is successfully sued by a creditor, that money is open to being garnished. It’s not super common, but it could happen.

Can you be arrested over debt?

No, you can’t. No creditor of consumer debt—meaning things like credit card, medical, or student loan debt—can force you to be arrested or jailed for not paying back the money. But can debt collectors take you to court? They sure can.

We mentioned above collectors can garnish wages and accounts or even take property with a court order. They can file lawsuits against consumers to get the money that is owed. And they’ll only do that if they believe that they can get the money. But the lawsuit isn’t to arrest you or throw you in jail. HOWEVER. If you’re ordered to appear in court, and you don’t show, you would be in contempt of court. That might lead to an arrest if the case is serious enough.

Things to keep in mind

Remember, a creditor will sue you if they think they can get the money that is owed. Outside of that, consumers do have rights under the Fair Debt Collection Practices Act. So you’ll want to make sure you know your rights when dealing with debt collectors.

Also, if you can’t pay back your debts, you have options. Things like making lists of your known debts, paying back what you can, and researching your options are great ways to stay ahead of collectors. Despite their reputation, collectors can be understanding of your situation and may be able to offer options in handling that debt. And there are great tips for building up your savings out there, so you can chip away at that pesky, no good, very bad debt.