While it is always going to be a better choice to deal with creditors directly rather than waiting for a debt to reach collections, if it does reach this point it is important to keep in mind that you still have options thanks to what is known as the Fair Debt Collection Practices act.
Ask for details in writing: Within 5 days of making contact, a debt collector is obligated to send you a written notice outlining the amount of money you owe, who you owe it to and how to dispute the claim. Most debt collectors won’t do this automatically, however which means the first contact you have with them should include asking for this information and nothing else. The goal of the debt collector is to force you to confirm that you will pay the debt or make a payment, and not having all of the details in front of you can make it easy to say the wrong thing and wave many of your rights without even realizing it. What’s more, asking for a copy of the details will prevent them from contacting you again until you have received them, giving you some time to get your defenses together if you have been caught off guard.
Dispute the claim: Once you have received the details of the claim in writing, the next thing you are going to want to do is to dispute the claim using the methods discussed in previous chapters, regardless of whether or not you believe you owe the money in question. This will put the onus on the collection agency to verify the debt, which is far from a sure thing even on debts that you do
owe. You have 30 days to send this letter from the date you received the details which means that using certified mail is key. Be sure to ask for a delivery receipt as nine times out of ten the collections agency will deny they received your request. Once you send this letter and notify the collection agency of this fact, they cannot contact you again until the debt has been verified. They also have to stop all reporting activity, make sure you demand this in the letter.
Keep track of everything: As discussed previously, debt collectors are limited in how they can approach you but, in most cases, will try and skirt these restrictions as much as possible in an effort to get you to agree to pay the debt or set up a payment plan. As such, it is in your best interest to take detailed notes every time you speak with them and keep anything they send you so you can look it
over for violations at a later date.
Illegal activities not previously covered include speaking to anyone but you or your representation about the debt, using abusive language, misrepresenting the amount of the debt of making false claims about legal action, seizing property or garnishing wages if they don’t intend to actually follow through. If they do any of these things, then the issue of the amount of debt you owe will essentially become moot as you will be able to take legal action against them and even the threat of doing so will often be enough for them to forgive some or all of your debt entirely. Be sure not to mention that you are keeping track of your conversations as this will cause them to be on their best behavior and decrease your potential for leverage.
Speak as little as possible: Everything that a debt collector says is for the purpose of collecting on the debt which means that the less you say, the less they have to use against you. Remember, regardless of what they may say up front, they are never really your friend, nor do they have your best interests at heart. They work on commission which means the more they get from you the more they will make. Never commit to anything, never agree that you owe the amount in question, always mention that you are considering bankruptcy and discuss payment options only if you intend to follow through. If they determine that you are unlikely to pay, and the amount owed is less than $2,500, they may give up and consider you more trouble than you are worth. While the debt will remain on your credit report for the next seven years, it might be worth it, depending on your current financial situation.
Be aware of time limits: Once you receive the details from the collection agency, you will need to look into the time-frame which they have to collect on the debt based on where you live (between three and six years in most cases). Once this period of time has passed they can no longer take legal action against you. It is important to be aware of these limits as if you make a payment after this period of time, some states will allow the clock to be reset, the same can be said for acknowledging you owe the debt or for signing up for a repayment plan.