How to Avoid Legal Issues With Debt Collectors

Avoiding legal issues with a debt collector is key to averting a day in court and a possible credit judgment. Not every debt collector pursues an unpaid debt in court. However, if threatened with a lawsuit, it is important to contact debt collectors immediately to resolve the issue. Several methods can help you avoid legal issues with debt collectors. Know your options, and then take action.

Instructions

1

Keep up with monthly minimum to avoid a lawsuit. You can keep debt collectors at bay by simply paying the required minimum on an account or paying off the balance completely. Resume payments if you've stopped to avoid legal issues.

2

Discuss new payment options. If you cannot afford your payments, avoid legal issues by calling your debt collector and asking for new terms. Request a decreased minimum payment, better rate or ask about skip payment options (forbearance or deferment).

3

Eliminate your balance with a settlement. If you have access to a lump sum of cash, call your debt collector and offer an amount to settle the debt and avoid legal issues. Debt settlements are for less than the unpaid balance. For example, if you owe a debt collector $5,000, you can offer to settle the debt for $3,000. Get any agreement in writing prior to making your final payment.

4

Dispute debts that you don't owe. Avoid legal issues with a debt validation letter asking the debt collector for information regarding the unpaid balance. Request written evidence that you owe the company money within 30 days of receiving a statement. Mail this letter directly to the debt collector by certified mail.

5

Avoid lawsuits with a bankruptcy filing. Debt collectors, lenders and other creditor cannot sue for a debt once you file a petition for Chapter 7 or Chapter 13 protection. Know the consequences of bankruptcy, and talk with a bankruptcy lawyer first. Consequences include a damaged credit history for 10 years and a decrease in FICO credit score.