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Most of the time, your first contact with a debt collector will be a telephone call from a representative, a pre-recorded message asking you to call a mysterious toll-free number, or a letter. Dealing with debt collectors can be a very traumatic experience.  Harassing collections calls, obscene language, threats and much more can send you into a state of despair. Creditors have even gone as far as contacting family members, friends, and employer. What’s worse is that if the creditor senses that you are timid or naive, you may even be pursued to pay a debt that is not rightfully yours.  A Collection agencies job does depend on them collecting a debt but they still have limitations as to how far a debt collector can go.  For example, did you know that you can instruct the collector not to call you at work? Or that they can’t call you before 8 a.m. and after 9 p.m.? Or that you could tell them that you are the only person to be contacted, since the agency is well aware of your location, there is no need to contact anyone else to find out where you are. This is where the Fair Debt Collection Practices Act comes into play.

The Fair Debt Collection Practices Act purpose is to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. Under the federal FDCPA, a collector is not allowed to make idle threats, express or implied (for example, "We must get your payment no later than the day after tomorrow"), or use abusive or profane language. I’m going to go into details about what this Act entails in future blog entries but for right now, I want to provide you with tips on how to deal with a debt collector.

Tip #1: Know the collection process - More than likely you are being contacted by a debt collector because a creditor has not received payment from you for several months. They have negotiated with another company to attempt to get you to pay. Third party collectors often purchase your debt for less than you owe, and your debt is now owned by the collector. Payments should be made to the debt collector and not the original creditor unless you are expressly instructed to pay the creditor directly. In this case, you should confirm such instruction in writing to both the creditor and the debt collector. A collector may also work for the creditor in return for a fee or a percentage of any money collected. In-house collectors that are affiliated with the original creditor work on behalf of the company directly. Because the creditor has taken a loss on your account or because you are late with making payments, this negative information may show up on your credit report.

Tip #2: Ask Questions - When a collector calls you, get as much information as possible. Ask for the name of the caller, the collection agency, the creditor, the address and about the amount the collector claims you owe. Make sure you that if you have not received anything in writing up until this point that you request something in written documentation form via mail immediately,

Tip #3: Keep a file -  Your file should include:

• Dates and times of phone conversations, pre-recorded messages the collector leaves on your voice mail.
•  Notes of conversations along with the name of the collection agency employee.
• When you send or receive correspondence. Copies of correspondence you send, as well as those you receive including envelopes.

Tip #4: Put it in writing - Send any correspondence Certified Mail, Return Receipt Requested so that you can have proof that it was received. If you negotiate a repayment plan over the phone, ask the representative to send you the terms of the plan in writing. You may also write a letter that explains your understanding of the negotiated repayment plan.  If there is any promise to remove or adjust reports in your credit history you should have this documented in written form just in case later you need to use it for reinforcement.

Tip #5: Don't be coerced - Never pay a bill you don't owe just to get the collector to "go away." Any payment of the debt is considered an acknowledgement that you are responsible. Even if you pay, that will not necessarily erase a negative entry on your credit report.

Tip #6: Examine the balance - Carefully review the amount you are being asked to pay. You should ask the collector to tell you the amount of the original debt as well as give you a breakdown of any interest, fees, or charges that have been added.

Tip #7: Don't ignore a collector - Even if the debt is not yours. It is in your best interest to respond to a collector immediately. Delay can mean the collector will continue to contact you. The collector may even file a lawsuit and get a judgment against you. The result can cost you more time and trouble in the long run.

This time I specifically told you what to do in a debt collecting situation. Next time, I will go further into details about what the debt collector can and can't do under the FDCPA. For more information you can visit the Frequently Asked Question page on the Federal Trade Commission website at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm