How to Deal With Collection Agencies if You Can't Pay

Dealing with collection agencies when you cannot pay requires determination and planning. Although some debt collectors may sound sympathetic over the phone, their only goal is to collect as much money from you as possible -- and in the least amount of time. It's up to you to stand up to the debt collectors by exercising your rights under the Fair Debt Collections Practices Act. The act is a federal law and regulates the behavior of debt collectors. Giving in to debt collectors and making promises you cannot keep could make your situation worse. That's why it's important to develop a sound strategy for handling the debt collectors and stick to it.

Instructions

1

Consult with a consumer affairs attorney for a full understanding of your rights under the Fair Debt Collections Practices Act, and to create a strategy for dealing with collection agencies while you're unable to pay. A relationship with a reputable attorney charging reasonable flat fees could provide significant benefits if you're really determined not to pay debt collectors. Not paying debts such as credit card bills and installment loans can lead to lawsuits, with many debt collectors seeking court approval for garnishment of your bank account or wages. An attorney can review threatening letters you are receiving from debt collectors -- or represent you in court if a debt collector files suit. Federal law also gives you the right to inform debt collectors that they must contact your attorney about your debt and not contact you. That's a benefit for dealing with debt collectors while you're unable to pay.

2

Authorize the attorney to pull a copy of your credit report and identify debts that you can safely ignore. State statute of limitation laws restrict the length of time debt collectors have to pursue court action on debts, and federal law limits the listing of collection accounts on credit reports to seven years.

3

Contact a local office for the state attorney general to ask about state statute of limitation laws if you decide not to hire an attorney. Obtain a copy of your credit report from AnnualCreditReport.com, a site endorsed by the Federal Trade Commission. Use the statute of limitations information from the state attorney general's office to identify debts on your credit report that are too old for considerations by the court.

4

Communicate with debt collectors only in writing. There's little to talk about if you really can't pay them. Send each debt collector an initial letter explaining that you are unable to pay your debt but will be in touch when your situation improves. Instruct debt collectors to contact you only by mail -- a request with which debt collectors must comply under federal law. Another option is to direct the debt collectors not to contact you at all, which is also your right under the Fair Debt Collection Practices Act. After receiving a letter from you requesting that they not contact you again, debt collectors may correspond with you only to acknowledge that they will comply with your request or that they are planning a certain action, such as filing a lawsuit.

5

Read any court notices you receive. It is imperative that you respond to notices of a lawsuit, called a summons. Failure to respond results in an automatic monetary judgment for the debt collector.