This article first appeared at U.S. News and World Report Money.
You failed to pay a bill when you were out of work or you forgot about an old debt. Suddenly, debt collectors are contacting you through the mail and on the phone. It can be frightening, particularly if you’ve never been in such a situation before.
The most important thing is to know your rights. Debt collectors cannot take money out of your pay check without having obtained a legal settlement in court. Only courts can garnish your pay. Debt collectors cannot threaten you or demean you. You do not have to put up with insulting or demeaning behavior from them. Here’s a quick summary of the legal limits of debt collection behavior.
Here are five key actions you can take to put yourself in control of the situation.
First, document every contact. Whenever they contact you in any way, whether by phone or by mail, document it. Save the letter they sent to you and take notes on any phone calls they make. Record the time and date of all such contacts. Similarly, make a copy of any letters or other material that you send to them. The more documentation you have, the stronger your case will be if you wind up getting sued by the debt collector.
Second, get a validation notice. Upon contacting you, a debt collector must send you a validation notice within five days that explains what you owe and who you owed the debt to. If you are retaining all documentation that the debt collector sends you, then you should have a copy of this. If you threw away some of the early material, you may have thrown away this document, so you should request another copy. Document when you make this request.
Third, ensure that you actually owe the debt. Once you have the validation notice, make sure that this is actually your debt. Sometimes, debts are created in your name in cases of identity theft. You’ll want to check your credit report, which you can do via the Federal Trade Commission for free. This should include some evidence as to the debt.
If you have no record of this debt and it truly is not yours, you should first create an identity theft report. Then, pass that report along to the debt collector along with a letter clearly stating that you have been a victim of identity theft. As always, document this contact with dated copies of what you sent. Here’s an example of the type of letter you can send.
Fourth, stop their harassment with a certified letter. You must send the debt collector a certified letter to ensure that it is actually received by the collector. This letter must clearly state that you wish for them to stop contacting you.
However, they can still contact you if they take a legal step regarding your debt, such as suing you or dropping the claim. Here is a sample letter you can use.
Finally, try to negotiate a deal. They’re likely to offer you a “discount” on the debt that you owe because, in their eyes, getting something out of this is better than getting nothing or going to court. In this situation, negotiation is on your side. Offer to pay a smaller amount, particularly if you can pay that amount in full, as that will be much more appealing to the debt collector than a payment plan.
Start by offering less than you can afford, even as little as 10% of the amount owed. Negotiate in writing by sending a simple letter and, as always, keep a copy for your records. Pay by check and write “Cashing this check constitutes payment in full” in the memo area of the check (include a photocopy in your records). Also, never submit any payment until you have an agreement in writing from the collector.
These steps will help you take control of your debt collection situation and move on with your life.