Fighting Back Against Debt Collection Letters: 5 Steps to Take

It can be pretty scary to walk to your mailbox and find a collection letter from a debt collection agency. But the truth is, because of the Fair Debt Collection Practices Act, you have more power in the situation than you might think. For instance, did you know that you actually get to control how the debt collector speaks to you - even in what format? What's more, the debt collector must prove to you that the debt is really yours before they can even begin their collection efforts. So, if you've received collection letters, take a deep breath, and let's look at some of your options.

Read the Letter Carefully

The first think you'll need to do is read the collection letter carefully. Is the debt collector really looking for you, or have they accidentally sent the collection letter to the wrong address? Do they clearly state whom they are and that they're trying to collect a debt? Do they give you contact information so that you can either phone them or write them in response?

Make Contact

The worst thing you can do is avoid a debt collection agency, because many times, they'll be allowed to take your silence as consent that you owe the debt. Instead, you'll want to make contact with them and ask them for a debt validation letter. The Fair Debt Collection Practices Act requires them to send you this letter within five days of their first contact with you, but it doesn't hurt to let them know that you expect it. The letter will outline the details of the debt, and tell you that you have 30 days to dispute it.

Accept it or Reject It

Once you receive the debt validation letter, you'll need to determine whether or not the debt is really yours. If it isn't, you'll need to tell the debt collector so in writing, sent certified mail with return receipt requested. If the debt is yours, you'll need to determine whether or not the statute of limitations on the debt has already passed. Because each state has different timing on this, you'll have to check out your state's rules.

Decide on Your Course of Action

You'll have a lot of decisions to make about the debt collection letter if the debt is yours. First of all, if it's past the statute of limitations, then the debt collection agency can't sue you for the debt, or garnish your wages - all they can do is ask you to pay it, and whether you do is up to you. If the debt is valid and current, you'll likely need to set up a payment plan with the debt collector to avoid legal issues. It's important that you don't give out any financial information on the phone, and that you only make the payments with a money order. If an unscrupulous debt collector gets a hold of your bank account information, they may make unauthorized withdrawals, leaving you in a bind.

Know Your Rights

As you go through the process of paying off a debt, things will go a lot smoother for you if you understand your rights as set out by the Fair Debt Collection Practices Act. And if the debt collector knows that you understand your rights - and aren't afraid to defend them in a court of law - he or she will more likely to abide by the laws that govern debt collection agencies.