Debt Recovery Tactics

Debt collectors can pursue you for the rest of your life for a debt that you legally owe. They are able to use a variety of tactics, but must remain within the law while doing so. The Fair Debt Collection Practices Act--a federal law--clearly outlines what debt collectors can and cannot do as they attempt to collect from you. The debt collectors cannot threaten or harasses you, and cannot call you at home or work if you tell them in writing that they must stop. The act provides other protections as well.

Collection Efforts

Debt collectors generally begin collection efforts by contacting you by telephone or through the mail. They may call you repeatedly during the day, but by law are not to contact you at odd hours, such as late at night or very early in the morning. Letters are mailed less frequently and generally demand full payment for the amount owed. Sometimes debt collectors will send letters offering to settle the account for less than the full amount owed--a key reason why you should read all correspondence from a debt collector. According to "The New York Times," some credit card companies were willing to settle debts for as little as 20 percent of the balance in 1999. However, debt settlement terms can vary widely, with some debt collection companies demanding--at least initially--that you pay at least 80 or 90 percent of the balance.

Lawsuits

Lawsuits are usually a last resort by debt collectors, although they have the option of filing suit at any time once you have legally defaulted on your loan. The debt collectors will file suit in the state where you live and you will receive a summons to appear in court. The debt collector could win a judgment in court for the full amount owed, plus legal fees. Many people who receive a summons attempt to settle the case before going to court by entering into a payment plan or some other arrangement. That allows the debt collector to have the court hearing dismissed. Ignoring the summons and not appearing in court almost always results in a judgment being awarded to the debt collector.

Wage Garnishment

The debt collector can seek to garnish your wages or your bank account after winning a court judgment. A judge must issue a court order allowing for the garnishment.