PayPal Collections (Can They Be Sent, How it Works + Other FAQs)

Many people have debt, and unfortunately, when debt isn’t paid after a long period, it’s sent to collection agencies. PayPal Collections is PayPal’s debit collection agency.

If you received a letter or message from PayPal Collections saying you owe money, you’re probably either wondering why you received the letter or how to pay your debt? If you’d like to find out, keep reading!

Does PayPal Issue Debt Collections In [currentyear]?

Unfortunately, PayPal does send your debts to debt collectors if you don’t pay them off in the time PayPal gives you in [currentyear]. Furthermore, PayPal will use any money sent to your account or in other connected accounts to pay off any of your debt with PayPal, or its affiliate companies, such as Xoom, eBay, etc.

If you want to learn more about how PayPal debt collections work, how to pay off your debts, and more read on!

Can PayPal Send Debt Collectors?

Unfortunately, PayPal can send your debt to a debt collector, but PayPal has its own debit collections department, and will not use a third-party debt collection agency

How Do PayPal Collections Work?

The PayPal User Agreement, states that any negative balance in your PayPal account is what you own to PayPal and the company can take these funds from money added to your account over time.

Additionally, if you have more than one PayPal account, PayPal can take money from the positive balanced account and pay off the negative balanced account.

Furthermore, if you have multiple currencies on your account, and any are negative for 21 days or longer, PayPal will convert them to U.S. dollars, which will also require a currency conversion.

Moreover, if you have a negative balance on an account with one of PayPal’s affiliate companies, PayPal will use any funds in your positive PayPal account to pay for the negative balance.

Lastly, if you continue to use your PayPal account with a negative balance when you were informed of the negative balance already, PayPal will add that to the debt you owe.

Moreover, if you don’t pay off your debt, your account will be suspended and PayPal will contact you.

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

Can PayPal Send Me to Jail?

Can PayPal Send Me to Jail?

PayPal has the right to “take legal action against you,” as stated in the PayPal User Agreement, Under “Actions We May Take.” However, PayPal will not send you to jail for debt collection.

Moreover, if you don’t pay your debts to PayPal, or its affiliate companies, PayPal will suspend your account until you pay it off.

Furthermore, if you continue to not pay your debts, even after your account suspension, PayPal may sue you for the money if it’s a significant amount.

However, if you don’t owe PayPal that much money, such as under $100, PayPal may give up on your debt collection.

Note, though, that your PayPal account will be permanently limited, and you will not be able to get the limit undone or create a new account in the future.

How Do I Pay off My Debt that’s in Collections?

To pay off any debt from in debt collection:

  1. First, you need to contact the debt collection agency and confirm that the debt is yours
    1. Furthermore, you should also contact the original debtor to make sure you have the correct collection agency
    2. Additionally, you should check your state’s statute of limitations, and know your rights before paying anything
  2. Next, you need to figure out how much you can afford to pay, and set up a payment plan
    1. If you can afford to pay in full, you should also ask the debt collector to delete the charge from your credit report, or mark it as “paid in full”
  3. Then, start making your payments and pay off the debt

Additionally, make sure you’re aware of debt collection scams and that you keep track of everything, including the agent’s names and contact information that you talk to.

Furthermore, when you finish making your last payment plan, you should ask for a “letter of completion” like a receipt and check your credit report.

However, it may not be updated for up to 30 days after your last payment.

To know more, you can also read our posts on how does PayPal make money, PayPal LLC business type, and PayPal permanently limited.


Unfortunately, PayPal will send your debt from PayPal or its affiliate companies to a third-party collection agency. However, PayPal will give you time to pay off your debt first.

Therefore, if you have a negative balance in a currency other than U.S. dollars, PayPal will give you 21 days before converting it to U.S. dollars. Additionally, PayPal will use any money put into your account, such as payments sent to you, to pay off your debt.

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Marques Thomas

Marques Thomas graduated with a MBA in 2011. Since then, Marques has worked in the retail and consumer service industry as a manager, advisor, and marketer. Marques is also the head writer and founder of

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