Knowing your legal rights and what action to take can help you eliminate your debt and debt collectors from your life. If you're dreading answering your phone or going to your mailbox because you are being hounded by debt collectors, then it's time to start taking action. Knowing how to deal with debt collectors is essential because it can affect your credit report and your peace of mind. The following steps can help guide you on your rights and in dealing with debt collectors to get that debt paid off and/or removed from your credit report.

A debt collector is responsible for collecting debt from people who owe money.http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm Debt collectors are also known by other names such as bill collectors, credit collectors, or account collectors. They are employed by companies who are owed a debt. If debt collectors are a problem for you, read on.

• Before you can effectively deal with debt collectors, you have to understand your rights. These rights are outlined under The Fair Debt Collection Practices Act (FDCPA).http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf This is a federal law which prohibits debt collectors from using unfair practices to collect on the debt. However, this does not mean that you won't have to pay your debt if it is legitimate.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html Rather, it outlines exactly what a debt collector can and cannot do when attempting to collect on the debt.

• A debt collector cannot:

1. Contact you if you have sent a letter telling them to stop.
2. Contact you at work if he or she knows your employer disapproves.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html
3. Ask you to pay more interest, fees or expenses than are allowed by law.
4. Make false statements to collect the debt.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm This can include:
   1. Concealing his or her identity on the phone.
   2. Falsely implying that you have committed a crime.
   3. Misrepresenting the amount you owe.
5. Harass, oppress or abuse you.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm This can include:
   1. Calling continuously.
   2. Using profane or threatening language.
   3. Calling you before 8 a.m. or after 9 p.m. (unless you have agreed otherwise).
   4. Publishing a list of consumers who refuse to pay their debts.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
   5. Using or threatening to use violence.
6. Inform anyone else about your debt unless you have given permission.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
   • -This does not include your attorney, the creditor, the creditor's attorney, credit reporting agencies, your spouse and your parent (if you are a minor).
   • -However, a debt collector can ask your friends and family how to get in contact with you.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html
   1. Claim federal benefits such as Social Security, IRA or 401(k).http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html
7. Threaten to take action that they cannot or will not take.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shhm This includes:
   1. Having you arrested.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
   2. Filing a lawsuit against you (if past the statute of limitations).http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html
   3. Garnishing your wages.
   4. Seizing your property.
   5. Causing you to lose your job.
   6. Putting a lien on your property.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html
8. Send you anything that looks like an official court or government document if it is not.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
9. Deposit a post-dated check prematurely.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
10. Contact you by postcard.http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm

• Understanding the statute of limitations on your debt is important. The statute of limitations is the amount of time that you can be held legally responsible for your debt. There are two ways this can affect you.http://www.forbes.com/finance/2008/10/31/debt-creditors-default-pf-education-in_af_1031investopedia_inl.html

• First, it can affect your credit rating. The statute of limitations for this debt is dictated by the Fair Credit Reporting Act. This law states that most items can remain on your credit report for seven years, except for bankruptcies, which can remain for ten years.http://www.ftc.gov/os/statutes/031224fcra.pdf

• Second, it limits the amount of time the collection agency can take legal action against you. This statute of limitation varies from state to state. http://www.abcnews.go.com/GMA/story?id=4358702&page=1It can range from three years to 15 years.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html It is important to understand this because you can restart the statute of limitations on your debt if you:http://www.forbes.com/finance/2008/10/31/debt-creditors-default-pf-education-in_af_1031investopedia_inl.html
  1. Acknowledge that the debt is yours (in some jurisdictions).http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/ZombieDebtCollectorsDigUpYourOldMistakes.aspx
  2. Make a payment on the debt.http://www.forbes.com/finance/2008/10/31/debt-creditors-default-pf-education-in_af_1031investopedia_inl.html
  3. Promise to make a payment.
  4. Enter a payment agreement.
  5. Make a charge on that account or open a new account with that company.http://www.cnn.com/2008/LIVING/personal/02/29/rogue.debt.collectors/index.html

• You can find out more about the specific statute of limitations in your state by contacting the Attorney General's office, or by going to one of the following sites:
  • Credit Infocenter: States of Limitations on Debtshttp://www.creditinfocenter.com/rebuild/statuteLimitations.shtml
  • CardReport.com: Statute Of Limitations For Debts http://www.cardreport.com/laws/statute-of-limitations.html
  • BCS Aliance.com: Statute of Limitations on Debt Collectionhttp://www.bcsalliance.com/y_debt_sol.html
  • Fair Debt Collection.com: Statute of Limitations on Debt Collectionhttp://www.fair-debt-collection.com/statue-limitations.html

• Once you realize what your rights are and understand the statute of limitations, you will need to decide on a course of action. You essentially have three options.
  1. Ignore the collection attempts.
  2. Request verification.
  3. Negotiate a deal with the debt collectors.

• Ignoring your debt is only a good option if it is past the statute of limitations in your state.http://www.abcnews.go.com/GMA/story?id=4358702&page=1 Although old debts may still be listed on your credit report, it is not always beneficial to pay them because paying off old debt can lower your credit score initially. It makes the debt look newer than it is.

• Still, if you know it is your debt, you should make every effort to negotiate a deal with the debt collectors. (See Step 5: Negotiate with the Debt Collectors) If, however, you don't feel the debt is yours or are unfamiliar with who is trying to collect it, then you should request that the debt collector verifies two things before you proceed:

1. That the debt is indeed yours.
2. That the collector with whom you are in contact has the authority to collect said debt.
   • - Both of these actions are covered in-depth in Step 4: Request Verification and/or Dispute the Debt.

• No matter what option you decide to use, it is important that you keep good records of all action. This can help prove your case later on.
  1. Send any letters to the debt collectors via certified mail with a return receipt.http://law.ga.gov/00/article/0,2086,5426814_39039081_115344623,00.html
  2. Tape any phone calls between you and the collection agency.http://www.creditcards.com/credit-card-news/debt-collection-tips-5125.php Most states allow you to secretly record the conversation. However, some states require you to inform the other party before recording.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
  3. Keep notes regarding the time and date of calls, the name of the caller and the name of the agency.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp 12
  4. Keep copies of your records as long as possible.http://www.creditcards.com/credit-card-news/debt-collection-tips-5125.php

• Unless you are absolutely positive that the debt is yours, you should definitely ask the debt collector for verification. http://www.wwj.com/How-To-Deal-With-Debt-Collectors/3114791 By law, the agency must verify the debt within five days after it initially contacts you. If they don't, then they can no longer attempt to collect on that debt or report it to the credit report agencies. http://www.ftc.gov/os/closings/staff/P064803fairdebt.pdf If they do verify the debt, you can either provide them with evidence that disputes their claim or negotiate to pay the debt.

• If the debt is being collected by someone other than the original company, you will also want to know that the company contacting you has the right to collect on it, even if you know you owe the original debt.

• Once you are sure that the debt in question is indeed yours, that the agency has the right to collect it and that the amount is accurate, you should usually try to negotiate a deal with the debt collector. Here are some tips to use when negotiating the deal:

1. Before making any type of payment, make sure you get the agreement in writing.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
2. Request that the creditor delete the account from your credit report. However, this will only remove the collection account from your report, not the original credit or account.http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/MakeADealWithDebtCollectors.aspx
3. Offer the debt collector less than you can afford.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
4. If they won't agree to remove it from your credit, insist that they mark the account "paid in full," even if you're paying less.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
5. Don't rush into anything.http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
6. Negotiate at the end of the month, when collectors are more likely to want to make a deal. http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp
7. Never allow a debt collector direct access to your checking account. In fact, you're better off sending a money order than a check. http://www.bankrate.com/brm/news/cc/20031020a1.asp
8. If you do pay by check, write on it "Cashing this check constitutes payment in full."http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P65141.asp

• If at any time you feel that your legal rights have been violated, you should file a complaint to the Federal Trade Commission.http://www.consumerlaw.org/issues/seniors_initiative/cc_debtcollection.shtml A letter of complaint can be sent to:

• • The Consumer Response Center at Federal Trade Commission
  • CRC-240, Washington, D.C. 20580.

• You can also call toll-free 1-877-FTC-HELP (1-877-382-4357) or use its online complaint form.http://www.ftc.gov/ftc/cmplanding.shtm

• You should also send a letter to your state attorney general's office, your local office of consumer protection and the Better Business Bureau.http://www.consumerlaw.org/issues/seniors_initiative/cc_debtcollection.shtml

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.