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What can a debt collector do to me?
This depends on whether the debt is secured or unsecured. Secured debt is debt that has collateral. For instance, if you have a car loan, the lender most likely has a secured debt with the car itself being the collateral. The lender is secured in that if you stop making payments, the lender and come and take the car back as partial repayment of your debt (and come after you for any remaining balance). If you have a home loan, this debt is secured because the bank has your house as collateral.
If you owe money to a merchant, this debt is most likely unsecured debt, meaning the merchant does not have any collateral to reclaim is you stop payments. If the creditor has an unsecured debt against you, they have nothing to reclaim. They can stop doing business with you, report you to a credit agency, or bring a lawsuit against you to collect the debt.
If the creditor does bring a lawsuit you will have the opportunity to defend. The creditor may realize that defending the action will take much more time and money then it is worth. The creditor may also drop the claim against you if they see that you will defend against it. If the creditor does win in court, and obtains a judgment, the creditor then has to seek ways to recover the judgment amount. They may do this through garnishing your bank accounts and wages.
How should I handle a collection action?
Respond to your creditor and explain your situation. Perhaps you have recently lost your job, you or your spouse has become ill, you have other bills, such as utility and house payments to make first. This may help lessen the chance that your creditor will turn the matter over to a collection agency. This may be because your creditor is understanding but more likely your creditor realizes that there may be other creditors ahead of them in line or that you simply do not have the means to pay them now and a collection action would not be as beneficial as working with you to form a feasible repayment plan. A creditor has to pay a fee for a collection agency to collect on the debt. If the creditor understands that you cannot pay, and will not pay a collection agency any sooner, they will be more motivated to keep the debt and save on the fees they would pay to a collection agency.
Can I get my creditor or collection agency to stop trying to collect on the debt?
Often, if you write a collection agency a letter asking them to cease collection actions they are bound by law to stop harassing you. A creditor trying to collect on their own debt is not bound by this law but will often honor your letter asking them to stop collection activity.
Collection agencies must stop contacting you once they find out you are represented by an attorney.
Can I negotiate with a creditor or collection agency?
Absolutely! You can negotiate the amount owed, when it is due, the interest rate, the status of the delinquency of the loan, etc. Make sure your new payment is actually decreasing the amount owed and not just paying interest every month. Make sure it is a payment that you will be able to meet so you are not in the same position, or a worse position, a few months down the road. If you need help negotiating your debt, contact your local attorney!