A good faith payment is money you send to show you intend to pay a debt, even if you cannot pay the full amount right now.
Good faith payments are most common in three situations: when you are behind on a bill and want to stop collection action, when you are negotiating a settlement with a creditor, or when you are working out a payment plan. The payment itself does not erase what you owe—it signals to the creditor that you are serious about resolving the debt rather than ignoring it.
The amount varies widely. Some creditors accept any payment, no matter how small. Others expect a percentage of what you owe—often 10 to 25 percent—before they will agree to stop calling or pause collection efforts. There is no legal minimum, and the amount you send depends entirely on what the creditor will accept and what you can afford.
Key Takeaways
- A good faith payment shows a creditor you intend to resolve a debt, and it can pause collection calls or legal action while you negotiate.
- The amount is not set by law—creditors decide what they will accept, and you negotiate based on what you can afford.
- Good faith payments do not reduce what you legally owe unless you have a written settlement agreement stating otherwise.
- Always get a written confirmation of what the payment covers and what happens next before you send money.
- If a creditor demands a good faith payment before discussing your options, that is a sign to verify they are legitimate and to understand your rights first.
How good faith payments work in debt negotiation
When you contact a creditor to discuss a past-due account, they often want proof you can actually pay before they invest time in negotiating. A good faith payment provides that proof. It also gives you leverage: once you have sent money, the creditor has an incentive to work with you rather than hand your account to a collection agency, because they have already received something.
The payment typically goes into a holding account or is applied to your balance immediately, depending on the creditor's policy. If you then reach a settlement agreement—say, paying 60 percent of what you owe in three installments—that first good faith payment counts toward the total. If negotiations fall apart, the money stays with the creditor as a partial payment on the original debt.
Some creditors will not negotiate at all without a good faith payment first. Others will discuss your situation before asking for one. There is no rule that requires them to negotiate, so if a creditor refuses to work with you, your options narrow to paying in full, waiting for the debt to age off your credit report (typically seven years), or exploring whether you have grounds to dispute the debt.
Good faith payments and collection accounts
If your debt has already been sold to a collection agency, a good faith payment works the same way but with different consequences. The collection agency may accept a small payment to show good faith while you negotiate a settlement. However, sending any payment to a collection agency can restart the clock on the statute of limitations in some states—the time period during which they can sue you. Before you send money to a collection agency, research your state's rules or ask the agency in writing whether a payment will restart the statute of limitations.
You also need to know whether the collection agency is the current owner of the debt or is acting as a representative for the original creditor. This matters because it affects who has the authority to settle with you and what a settlement actually means. Ask the collection agency for written proof of ownership or authorization before you send any payment.
What to do before sending a good faith payment
Get the creditor's request in writing, or send your own written offer and ask them to confirm it in writing before you pay. Your written record should include the amount of the good faith payment, what it is for (the specific account and debt), and what happens next—whether it is held pending negotiation, applied to your balance, or credited toward a settlement.
Do not send cash or wire transfer money unless you have no other option. Use a check, money order, or credit card payment so you have a record of the transaction. If you pay by check, photograph the front and back after it clears. If you pay by money order, keep the receipt. If the creditor later claims they never received your payment, you will need proof.
Before you send anything, verify that you are actually talking to the creditor or a legitimate representative. Scammers often pose as debt collectors and demand good faith payments for debts that do not exist or that have already been paid. If you are unsure, hang up, look up the creditor's official phone number on your bill or their website, and call them directly.
Good faith payments and your credit report
Sending a good faith payment does not automatically improve your credit score. The payment is recorded as a partial payment on a past-due account, which is better than no payment at all, but it does not erase the late payment history. Your credit report will still show that you fell behind.
However, if your good faith payment leads to a settlement agreement, you may be able to negotiate what gets reported to the credit bureaus. Some creditors will agree to report the account as "settled" or "paid as agreed" rather than "settled for less than owed." This distinction matters for your credit score. Ask about this in writing before you send the payment, and get any agreement in writing before you pay.
Good faith payments versus partial payments
The terms are often used interchangeably, but they mean slightly different things. A partial payment is simply money you send toward a debt when you cannot pay the full amount. A good faith payment is a partial payment made specifically to show intent to resolve the debt and to open negotiations. Every good faith payment is a partial payment, but not every partial payment is made in good faith.
The distinction matters legally in some states. In states with strict interpretation of payment law, a creditor might argue that accepting a partial payment without a written agreement that the payment does not settle the debt means they have accepted the debt as satisfied. To protect themselves, creditors often require you to sign a statement saying the payment is "without prejudice"—meaning it does not settle the debt or stop them from pursuing collection. Always read what you are signing before you send money.
When a creditor demands a good faith payment upfront
Be cautious if a creditor demands a good faith payment before they will even discuss your situation. Legitimate creditors usually want to understand your circumstances first—whether you have lost income, face a medical emergency, or have other debts. They ask for a good faith payment after they have decided negotiation is possible, not before.
If someone calls claiming you owe a debt and immediately demands a good faith payment to avoid legal action, verify the debt first. Ask for the creditor's name, the original creditor's name, the account number, and the amount owed. Then hang up and contact the original creditor directly using a phone number from your records or their official website. Do not use a phone number the caller provides.
You also have the right to request written verification of the debt. Under the Fair Debt Collection Practices Act, a collection agency must provide this within 30 days of your request. If they cannot verify the debt, they must stop collection efforts. Do not send a good faith payment until you have verified the debt is real and you actually owe it.
Frequently Asked Questions
Does a good faith payment stop a creditor from suing me?
Not automatically. A good faith payment may pause collection calls while you negotiate, but it does not prevent a lawsuit unless you have a written agreement stating the creditor will hold off. Get any agreement in writing before you send money. If a lawsuit has already been filed, a good faith payment does not stop the case—you need to respond to the lawsuit through the court.
What if I send a good faith payment and the creditor ignores me after that?
Document everything: the date you sent the payment, the amount, the confirmation of receipt, and all communication with the creditor. If they continue collection efforts without responding to your negotiation offer, send a written letter (certified mail, return receipt requested) restating your offer and asking for a response within 10 business days. Keep a copy. If they still ignore you, you may have grounds to file a complaint with your state's attorney general or the Consumer Financial Protection Bureau.
Can I get my good faith payment back if the creditor will not negotiate?
Generally, no. Once you send money, it is treated as a payment on the debt, not a deposit held in escrow. The creditor can apply it to your balance and continue collection efforts for the remaining amount. This is why you should only send a good faith payment after you have confirmed in writing what the creditor will do with it and what happens next.
Does a good faith payment restart the statute of limitations on an old debt?
It depends on your state. In some states, any payment restarts the clock. In others, only a written acknowledgment of the debt does. Before you send a good faith payment to a collection agency for an old debt, research your state's law or ask the agency in writing whether the payment will restart the statute of limitations. Get their answer in writing.
What should I do if a scammer demands a good faith payment?
Hang up immediately and do not send money. Scammers often impersonate collection agencies and demand good faith payments for debts that do not exist. Verify any debt claim by contacting the original creditor directly using a phone number from your records. If you believe you have been targeted by a scam, report it to the Federal Trade Commission at reportfraud.ftc.gov.