What can go wrong when you have a conversation with employees from collection agencies?

Plenty.

This is not to say that you should not communicate with employees from collection agencies when they contact you about a debt, but you should think very carefully about what you say to them.

You need to remember that they are not your friends, they are not there to help you, and information that you give them to them – to borrow a police phrase – can and will be used against you.

Don’t tell them where you work. They can start calling your employer and harassing you there.

Don’t tell them where you bank. It makes it easier for them to pursue a judgement against you.

Don’t acknowledge the debt that they claim that you owe, when they call you.

Instead, tell them that you of course want to pay off any debts that you owe, but you will need them to mail you a copy of any documentation that they claim proves that you owe the debt, as well as a complete account history.

If you have a P.O. Box to give them, rather than your home address, that is much better.

If the debt is legitimate and you want to work out a payment plan with them, make sure of two things. One, get the agreement in writing, and two, if you reach an agreement, make sure that you consistently make these payments.

If you can pay them with cashier’s checks – and save the receipt! – then you are better off doing that then writing checks from your bank account. You do not want them to have access to your checking account information.

Also, make copies of ALL correspondence that you send to them, put Cc: (Name of Debt Collection Agency) on the letter so they know that you made a copy, and send all letters to them by certified mail with return receipt.

If they know that you are keeping track of all conversations and correspondence with them, they are much less likely to try to pull a fast one on you. And if you are keeping good records, and they do try something shady, they are less likely to be able to get away with it.

It’s a common belief these days that you simply HAVE to use credit to survive, but this is far from the truth.

How do you think people survived before credit cards were invented? The first credit card ever invented was the Diners Club card in the early 1950s, and it wasn’t until decades later that the use of credit cards became as widespread as it is today.

The problem with credit cards and with credit in general is that few people acknowledge the truth about how they work: you will borrow money thinking that you are going to pay it back quickly, and then you will end up instead making payments for decades, paying double, triple, quadruple the purchase price of the product. And credit cards will keep you poor, not rich.

So how do you live without credit?

1.) Get a debit card. You don’t need a credit history for that. And with a debit card you can’t spend more than you have.

2.) Need a car? Buying new cars rarely makes financial sense – they lose value the minute that you drive off the lot. Do your research and find a used car that you can afford to pay for. And then take the money that you have always been paying for car payments and save that money every month, in an interest bearing account, so when your used car needs to be replaced – you can buy a new one with cash.

3.) Give yourself a cash allowance every week for lunch, gas, entertainment, etc., and do not exceed it.

4.) Want to buy a house? These days, you have the option of buying an owner-financed house. If you can put down as little as $5,000, and can make regular house payments, you can find homeowners who are willing to wheel and deal. If you DON’T have $5,000 to put down and you can’t be sure that you can make the monthly payments – then you should not be buying a house. Note: there are numerous things that can go wrong with owner financing, so make sure that you have your own lawyer read over the contract for you.

5.) Cell phone companies may require a credit history for their two-year contract plans. So instead, for cell phones, do the pay-as-you-go option. There are very affordable plans these days, some in the area of $40 to $50 a month for unlimited minutes. debt-be-gone" target="_blank">Discover how to get out of debt fast

You have an obligation to repay your debts, even if you have fallen on hard times.

However, you don’t have an obligation to be harassed, to be threatened, to be treated badly.

The Fair debt Collection Practices Act offers protection to consumers who have borrowed money.

This does not mean that you can, or should, borrow money with the intention not to repay.

However, let’s say that because of illness, or job loss, or a mortgage loan resetting, you have fallen behind in paying your bills.

debt collectors are not allowed to:

Call you before 8 a.m.
Tell people that you owe money
Threaten to have you arrested
Threaten you in any way
Call you at work if your employer does not approve of their calls to you at work

When debt collectors contact you, to protect yourself:

Do NOT tell them where you work if they don’t know
Don’t give them bank information
Don’t pay them over the phone
Find out their information and do research to make sure they are a legitimate collection agency

Ask them to send you documentation which proves that you owe the debt that they claim that you owe, and also to provide a complete account history of this debt.

Do not acknowledge that you owe the debt; tell them you want to see proof of their claims.

If you do owe the debt, find out what kind of payment arrangements you can make with the collection agency, and stick to those payments. Don’t promise to make payments and then go back on it. This just makes things worse for you. Discover how to get out of debt fast

If you are contacted about a very old debt that you owe, it is very important that you do not act hastily. And here’s why.

Every debt has a statue of limitations. If the debt is more than six or seven years old, in some states, the debtor no longer has the legal ability to take you to court over the debt.

However every state has different laws, and if you live in one state and owe an old debt from another state, it can get even more complicated.

If you are contacted about paying back an old debt, the best thing for you to do is to speak to an attorney.

The problem is, if you even speak to the debt collection agency, you may accidentally reactivate a debt that you no longer owe.

Even if it is a small amount, talking to the debt collection agency can cause you harm – because you can cause the debt to suddenly appear on your credit report…after it had dropped off completely…which can cause your credit score to plummet. And if your credit score plummets you can be denied loans or suddenly see your interest rates skyrocket.

This is not a suggestion that you ignore your debt obligations; if you borrow money, you should always repay it. However, you should always know your rights under the law and should not be punished with bad credit just for trying to negotiate with creditors in good faith. Discover how to get out of debt fast