According to NCOA research, nearly half of Americans age 60 and over have an average income below what they need to cover basic needs. And when the cost of living continues to outpace annual Social Security increases, many people have little choice but to go into debt.

In fact, data shows that one in five adults age 65 and over reports having medical debt ranging from $1,000 to as much as $10,000 or more.¹ Among the people who carry such debt, 42% have cut back on food and other necessities—or are using credit cards or taking out loans to cover basic needs.1 Perhaps unsurprisingly, nearly 93% of surveyed adults between age 66–71 have a credit card balance.²

“Some of us are fortunate enough to be able to pay those balances in full each month,” said NCOA’s Jessica Johnston, Senior Director, Center for Economic Well-Being. “But for the many of us who simply can’t, the negative impact on our physical, mental, and financial health is very real.”

Low-income older adults are at especially high risk of having higher “debt stress,” Johnston continued—which is the ratio of debt to assets. And that means that any surprise expense, like a health crisis or home repair, can result in an overwhelming financial burden.

If you’re carrying debt and living on a tight budget, it’s easy to fall behind on payments. But it’s important to know that unpaid debt can lead to debt collection—a stressful process that can damage your credit report and more. Here’s what you need to know about what it is, how it works, and what to do if a debt collector contacts you.

What is debt collection?

When you owe money to a creditor—and that creditor believes you haven’t made your payments as agreed—they may send your information to a third party for debt collection. Sometimes, debt collectors work internally to an organization—within a hospital’s accounting department, for example; other times, they are outside agents hired by the creditor to pursue payments on their behalf—like a lawyer. Some collections bureaus even buy past-due debts from creditors and then take on the responsibility of getting them paid.

Any type of unpaid consumer debt can fall into debt collection, including but not limited to:

• Credit card debt
• Personal loan debt
• Auto loan debt
• Medical debt
• Unpaid phone and utility bills

Many creditors allow some leeway with their repayment schedules. Still, if you don’t make some form of payment within a few months—and you haven’t communicated with the creditor to work out an agreement—you likely will face the debt collection process. At that point, your original creditor will stop working with you directly, and their designated debt collector will take over.

How does debt collection work?

The first time a debt collector contacts you, they are required to identify themselves immediately. They must also provide specific information about the debt they're attempting to collect. This includes:

• Your name and mailing address
• The original creditor's name
• The exact amount you owe, itemized
• The account number linked to the debt
• How to file a dispute if necessary
• The timeline for filing a dispute (usually 30 days)

Debt collectors may try to contact you at home or at work in a variety of ways—including by mail, phone, email, text message, or an in-person visit. If they're unable to reach you directly, collectors are even permitted to get in touch with your family and friends to confirm your contact information. That said, all debt collectors must behave in a professional manner and follow specific rules of conduct that govern their industry.

What are the debt collector rules protecting me?

The Fair Debt Collection Practices Act (FDCPA) helps protect older adults and other consumers from threatening, abusive, or deceptive debt collection techniques. These include:

• Using profanities
• Threatening violence or arrest
• Identifying themselves improperly
• Harassing you (e.g., calling you repeatedly, or calling outside the hours of 8 a.m. to 9 p.m.)
• Insisting you owe more than you do
• Impersonating an attorney or police officer

If you feel you're being mistreated by a debt collector, or you suspect you're being scammed, take action by filing a complaint with the Consumer Financial Protection Bureau (CFPB). You can also submit a complaint to your state’s attorney general.

What if I don’t agree that I owe a debt?

Billing errors and inaccuracies are common. Between January 2024 and May 2025, the CFPB fielded 404 complaints about medical debt from consumers age 62+. Nearly half of these complaints (196) involved attempts to collect debt that was not owed.³

That’s why, if you’re contacted by a debt collector, it’s important to verify that the debt is accurate. If you don’t believe you owe (or even own) the debt, you have the right to dispute it. You can do so by sending a written notice to the debt collection agency stating that you're contesting the debt. Since there's a time limit on disputing a debt—typically 30 days from when you receive the initial collection notice—you should send your letter right away. Even better, send it via certified mail, which provides proof of delivery and receipt.

How does having a debt in collections affect my credit score?

After a debt collection agency contacts you, they can report the unpaid debt to the three credit reporting agencies (Equifax, Experian, and TransUnion). This debt will appear as a collection account on your credit report and may lower your credit score. A low credit score could make it harder to get a loan in the future and even affect your ability to enter assisted living or a nursing facility. It may also hurt your efforts to get a part-time job during retirement. 

A collection account generally stays on your credit report for up to seven years—even if you pay it off. Medical debt is the one exception. In April 2023, the credit reporting bureaus announced they would remove all paid medical debts from consumer credit reports. They have also taken steps to remove all medical collection accounts with amounts of $500 or less.

While paying off your debt will not immediately erase your collection account from your credit report, it can help raise your credit score again over time.

What should I do if my debt is in collections?

No matter what, if you receive a debt collection notice about an unpaid debt, do not ignore it. Avoiding the situation may only make things worse. Your best bet is to address it head-on.

If you’ve determined the debt is valid and have no reason to dispute it, the next step is figuring out how to pay it. You have options when it comes to settling your debt and stopping debt collection activities. These include:

• Paying off the balance in a lump sum: This option makes sense if you have the cash to repay the debt in total. You may even be able to negotiate a lesser balance in exchange for paying it off.
• Requesting a repayment plan: The debt collector may be willing to accept monthly payments that allow you to settle the debt over time. It’s up to you to determine a payment amount you can manage, based on your personal budget and living expenses.
• Working with a credit counselor: If you're carrying a lot of credit card debt, consider working with a credit counselor to create a debt management plan. This plan can help you roll all of your balances into a manageable monthly payment. Once your creditors agree to this arrangement, debt collectors should stop contacting you altogether.

"Having an account in debt collections can be stressful if you’re an older adult with limited resources,” said Johnston.

But when you understand more about how it works, and the options available to you, the process becomes less scary," she said.

According to Johnston, there are various debt relief programs and services that can help you take back control of your finances and get a little more peace of mind. And if you're looking for smart budgeting tips, NCOA's Budget CheckUp can help you create a monthly budget and stretch your money further.

FAQ

Are seniors protected from debt collectors?
Yes—to a degree. The Fair Debt Collection Practices Act shields consumers of all ages from misleading communications, deceptive actions, harassment, and other abuse. Beyond that, your state may have specific elderly debt collection laws that can help. You may contact your state Attorney General’s office to learn about your rights and protections where you live.

Can a debt collector sue you if you’re on Social Security?
Yes, they can sue you. But they can’t take your benefits without first winning a case against you for the specific amount the creditor says you owe. Even then, the debt collector successfully must seek a court order to garnish your Social Security income before they can deduct any money from it. While not completely out of the question, it’s generally unlikely. That’s because many older adults who rely on Social Security are considered “judgment proof.” If this is true for you—or the debt collector believes it is—they may not bother to pursue collection any further. It simply isn’t worth their time.

Is there debt forgiveness for seniors?
​​​​​​​Yes—to a degree. You won’t find a general government-sponsored program that will wipe out your credit card balances, outstanding medical bills, car payments, mortgage, or other unpaid consumer obligations. However, if you have credit card debt that you’re struggling to repay, you might consider a debt management plan. These plans can offer welcome relief, but requirements are strict and they’re not necessarily the right choice for everyone. Credit counseling is another option, too.

Sources

1. Lindsey Copeland. Examining the Consequences of Health Care Debt Among Older Adults. Medicare Rights Center. August 22, 2024. Found on the internet at https://www.medicarerights.org/medicare-watch/2024/08/22/examining-the-consequences-of-health-care-debt-among-older-adults

2. Jamie Cattanach. 97.1% of Retirement-Age Americans Have Nonmortgage Debt, With Residents in Largest Metros Owing Median of $11, 349. LendingTree. January 21, 2025. Found on the internet at https://www.lendingtree.com/personal/places-where-people-at-retirement-carry-the-most-debt/

3. Consumer Financial Protection Bureau (CFPB) Complaints. January 2024 to May 2025.