The last thing you want when you are worrying about money problems is people coming at your door or calling you, pushing you to pay off your debts. Of course the best advice would be to not let it get this far. Try to negotiate with your original creditor and work out a payment schedule that is acceptable to both of you before a third party comes into the picture, bringing along a lot of extra costs.
However if you find yourself in over your head, dealing with a debt collection agency may be unavoidable. If this is the case in your situation, prepare yourself for the ride and educate yourself about the rights that you have. There are regulations about how a debt collector is able to collect money from you. Threats, harassment and abusive language should not be accepted, and needs to be reported.
You need to go by the book, but so do they. You don’t have to be abused simply because you are having money problems. It could also be that the debt they are chasing you for is not even yours, so when you get a phone call or a letter from a debt collector, make sure that you have something in writing that you can thoroughly check before responding to the demand.
The most important thing to do is to keep your head out of the sand and try to work through the problem with them. You don’t want to live your life ignoring their phone calls and being scared of opening your mail. Answer the phone calls, open your mail and start the dialogue. Debt collectors and creditors in general are more open to negotiation if you take an active position and show that you really want to solve the problems. Once you are negotiating with the debt collector you need to ensure that you document everything.
Keep recordings of phone conversations, any written correspondence (keep a copy of anything you send or receive) and, importantly, when you come to any agreement about repayment, you must get it in writing. When you are sending mail out to the debt collectors or original creditors you should certify or register your mail, so you have proof of sending the letter in case it is lost in the mail or its receipt is disputed.
If you do not respond to correspondence or telephone calls from debt collection agencies, you will only win yourself a reputation as somebody who is trying to avoid facing up to your responsibilities. And in the long run, these agencies won’t just “go away”. Before you know it you will be in court, which is something best avoided.
If your indebtedness has reached a point where a judge has to decide, matters have been taken out of your hands. Unless your dispute is for a small amount of money, you will need to engage a lawyer to be competently represented, and it is likely that at this point, lawyer’s fees may well not be within your budget. But in saying that, if your case has come before a court, make sure that you show up (with or without a lawyer).
It may be that in cases of genuine financial hardship the court will appoint a lawyer to help you understand your rights and responsibilities, for no cost. But you do have to be present in the courtroom, because if you don’t show up, the creditor will definitely win and you will get stuck with all the legal fees as well.
Taking all this into consideration, really the best thing you can do is to avoid debt collectors all together. Dealing with these agencies can take a lot of your energy and put a lot of pressure on your shoulders. If you show your original creditor good will by contacting them and negotiate your payments, it is more likely they will grant you some good will too, and deal with your directly rather than engaging debt collectors.