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Debt Handling - Debt Collectors And Your Rights

It happens - you get behind on your bills. With the economy in its current state, this can happen to nearly anyone, particularly if your hours have been reduced, or there's a medical emergency, or you've been laid off. The side effect of this is that debt collectors call and try to intimidate you into paying early.

You have a few measures of recourse, however. The Fair Debt Collections Practices Act sets solid restrictions on what a debt collector can and cannot do. They cannot call between 9 PM and 8 AM; and whether or not they can garnish wages is dependent upon state regulations. You may also tell them to continue all communications via the US postal service.

Contrary to popular myth, you are not penalized-legally-by refusing to take the call; you can screen them as needed, and caller ID can be used to filter out calls that block their number. (Most debt collection calls use blocked numbers specifically so that people will pick up the phone to see who it is.)

Of course, the best way to stop harassing debt collection calls is to talk to the debt collector and work out a livable payment plan. Before you do this, get a realistic assessment of how much you spend in a month and look for things you can cut out; for example, cutting back on meat and eating more vegetables is one way to do this.

Not eating at fast food restaurants is another - for the price of feeding a family of four at McDonalds, you can buy a week's worth of groceries if you stick to basic staples.

Then assess your debts -which ones have the highest interest payments or highest mandatory monthly payments? Which ones can be eliminated fastest? Focus on paying down your debts - and leave yourself some wiggle room in the budget for emergencies and unexpected events.

Once the debt's eliminated, you'll stop the calls. Do be sure to get copies of your credit reports and look them over at least twice a year; make sure that when the debt is settled, it's reflected properly on the credit report as having been addressed and settled. There's a set of special terms that indicate things on credit reports, and it's in your interest to know them and monitor how they appear.

When you do accept phone calls, take down a sheet of paper and write down the date, time, and any terms agreed to. If you've insisted they stop calling, note that as well. If it's legal to do so in your state, record the call...and be sure to tell them that they're being recorded. It curbs a lot of behaviors.

Don't be afraid to negotiate. Most debt collectors can accept substantially less than what they're asking for - they don't want to; because they get paid a percentage of what they collect, but it's often possible to get them talked down to three quarters or even half of what's owed if you're diligent and make a good impression. They know that half of something is better than all of nothing.

And, before you send anything past the initial payment, get something in writing detailing the terms of the agreement. Look it over carefully, read it with an eye towards hidden catches, and call them if there's anything that doesn't match what was covered on the phone (phone recordings are a good safety net here.)