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Can Paypal Send You To Collections

By David Krug 4 minute read

When debts go unpaid over an extended length of time, they are turned over to collection agencies. PayPal Collections is the company tasked with collecting overdue accounts.

If you received a letter or communication from PayPal Collections stating that you owe money, you may be asking why you received the letter or how to settle your debt? You can find out by continuing to read!

In 2022, does PayPal issue debt collection?

PayPal will, unfortunately, submit your bills to debt collectors if you don’t pay them off by 2022, the deadline PayPal has given you.

The money you receive from PayPal or any of its affiliated firms, such as Xoom, eBay, etc., will be used to settle any obligation you owe to PayPal or any of its affiliate companies, including those mentioned above.

If you’d like to understand more about how PayPal debt collection works, how to pay off your debts, and more, please read on!

Can PayPal use Debt Collectors?

However, PayPal has its own debt collection department and will not employ a third-party agency to collect your debt, which is unfortunate because PayPal can send your debt to a debt collector.

How do PayPal Collections operate?

If you have a negative balance in your PayPal account, according to the terms of your account, PayPal owns that money, and it can deduct it from future deposits.

For those who have several PayPal accounts, the company has the option of transferring money from one to pay off a balance that isn’t positive.

When numerous currencies are negative for more than 21 days, they will be converted to U.S. dollars, which will need a currency conversion on your account as well.

Additionally, if you have a negative balance on an account with one of PayPal’s associate firms, PayPal will utilize any cash in your positive PayPal account to pay for the negative amount.

As a last note, if you continue to use your PayPal account while it has a negative balance, PayPal will add it to your debt.

Aside from that, PayPal will attempt to notify you if your account has been suspended for failure to make timely payments on your obligation.

You will be contacted by mail or phone to pay off your debt, and PayPal will not lift the suspension until you do.

Can PayPal Imprison Me?

In accordance with PayPal’s User Agreement, under “Actions We May Take,” the company has the ability to “take legal action against you.” Nevertheless, if you owe money to PayPal, you won’t be jailed.

If you don’t pay your PayPal or affiliate company bills, PayPal will suspend your account until you do so.

As a result, PayPal may sue you if you refuse to pay your bills even after your account has been suspended.

However, if you owe less than $100 to PayPal, they may give trying on collecting your debt. But keep in mind that you will be unable to raise your PayPal limit or open another account in the future.

How Can I Repay My Debt That Is Being Collected?

To settle any outstanding debts owed to a collection agency:

1. To begin, make contact with the entity in charge of collecting the debt and verifying your ownership of it.

  • Contacting the original debtor should also be a part of your due diligence process.
  • Check your state’s statute of limitations and know your rights prior to making any payments.

2. Once you’ve determined your budget, the next step is to create a payment schedule.

  • Request that a debt collector removes or marks as paid the charge on your credit report if you can pay in full.

3. Begin making your repayments and pay off your debts as soon as possible

Keep note of everything, including the names and phone numbers of the debt collectors that contact you, to avoid falling victim to scammers.

In addition, you should monitor your credit record and get a letter of completion like a receipt when you finish your last payment schedule.

However, it may not be updated for up to 30 days after your most recent payment has been processed.

To learn more about how PayPal makes money, PayPal LLC company type, and PayPal permanently limited, you may read our blogs on these topics as well as others.

Bottom Line

You’ll have to deal with a third-party collector if you owe money to PayPal or one of its subsidiaries. PayPal, on the other hand, will allow you to pay off your debts first.

PayPal will give you 21 days before converting a negative balance into a currency other than U.S. dollars. Aside from the money you receive as payments, PayPal will also utilize the money you owe.

David Krug