How To Deal With Debt Collectors

If you've got a debt collector on your back, your first reaction might be to make a payment immediately.

That's one of the greatest mistakes you can make, says Gerri Detweiler, author of "Stop Debt Collectors." There might be an error in the amount you owe – and it's very possible your other debts or financial needs should take priority.

If a debt collector contacts you, the first step you should take is to ask for verification. "Ask the debt collector to verify the debt in writing," Detweiler says. Keep your first conversation short and sweet. Reveal no information about yourself or your finances. Expect to receive verification within a week or two. 

Don't be ruffled, she advises, and don't worry too much about your credit report. It does not improve your credit score to pay an account that's already in collection.

In most states, there's little a debt collector can do if you don't pay your debt, except take you to court and get a judgment against you, according to Detweiler. True, unpaid judgments are serious. They generally can stay on your credit report for up to seven years. It may be less, depending upon your state's statute of limitations. The clock usually starts ticking from the date of the event. Check statutes of limitations with your state attorney general's office.

Experts advise that you decline any new credit from a creditor to whom you owe money. Once a creditor renews a credit relationship, the clock may start ticking all over again on the statute of limitation.

If you decide to negotiate a payment plan with a debt collector, always obtain written documentation of the agreement, Detweiler says. Ask the collector to confirm the debt won't be reported to the credit bureau. Keep this record. You may need it years later if another debt collector calls.

If the debt collector won't provide written confirmation, send a certified dated letter confirming terms of your payment plan. Keep a copy.

By Ed Coury, Senior Editor and Midwest Bureau Chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950.