Accounts Receivable

Q: Do debt collectors sue?

Creditors and debt collectors can sue you , but that’s usually a last resort. They start with collection efforts that cost them less, and that usually includes a willingness to negotiate directly with you. Lawsuits are more likely if they believe that you have the resources to pay them, if the amounts involved are large, or if you have cut off all contact with them. Even if a lawsuit is filed, however, there's no guarantee that they’ll win. Negotiation may still be on the table. In fact, you may be able to negotiate a debt after losing a lawsuit.

Accounts receivable summary:

Accounts receivable is a term used to describe money that is owed to a company.
Businesses have accounts receivable departments that manage and collect payments.
If you owe money to a lender, you may be contacted by a representative from the accounts receivable department.

Accounts receivable definition and meaning

Accounts receivable is a term used to describe money that a company is owed by its customers. If you owe a lender or creditor money, you may be contacted by a representative from the accounts receivable department. Someone from the accounts receivable department may call you or send a message to discuss the account or collect payment.

Key concept: Accounts receivable is the department responsible for receiving payments. This may be the first department to contact you if you miss a payment.

More about accounts receivable

If you have unpaid debt, you may be contacted by someone from the lender or creditor's accounts receivable department. They may call to remind you about your debt and continue to follow up about nonpayment until your account is back in good standing.

After several unsuccessful attempts to collect payment and/or multiple missed payments, the lender or creditor may send your unpaid debt to a collections agency. The collections agency may continue calling or emailing you to collect payment. The creditor or collections agency could also file a debt lawsuit against you.

If you can't afford to pay your debts, explore solutions like debt resolution and debt consolidation. Working with creditors and lenders to reduce the amount of debt you owe or restructuring your outstanding debts through debt consolidation could streamline payments and make your debt more manageable to pay off.

Accounts Receivable FAQs

What happens if I can't make my debt payments?

If you can't pay credit cards, student loans, or other debts on time, creditors or lenders can report late payments to the credit bureaus. Late payments usually have a negative impact on your credit profile. Eventually, debts might get sold to a collection agency.

It's a good idea to contact your creditors or have a conversation with a debt consultant if you think you're in danger of missing a payment. Creditors may offer financial hardship programs to give you temporary relief. A debt consultant could help you weigh other options to manage your debt.

What happens if you ignore a debt collector?

Ignoring a debt collector doesn’t make them go away or stop contacting you. You can still expect phone calls, letters, or emails about the debt. And if the debt collector decides to take things further, they could sue you in civil court to force you to pay.

Do debt collectors sue?

Creditors and debt collectors can sue you, but that’s usually a last resort. They start with collection efforts that cost them less, and that usually includes a willingness to negotiate directly with you. Lawsuits are more likely if they believe that you have the resources to pay them, if the amounts involved are large, or if you have cut off all contact with them. Even if a lawsuit is filed, however, there's no guarantee that they’ll win. Negotiation may still be on the table. In fact, you may be able to negotiate a debt after losing a lawsuit.