Getting yourself out of debt is never an easy experience. The best way is to never get there in the first place, but once you are in debt, there are a few things you should know.

-         The Fair Debt Collection Practices Act

This statute was enacted by congress to protect the consumer from harassment by debt collection companies. Threatening to smash your car is just not cool. It is illegal too. Constantly barraging you with phone calls, that is illegal too. Banging on you door at midnight, yes, that too is illegal. So if you are dealing with a debt collection agency that seems to live in the world of movies instead of the real world, get yourself some legal help and stop them. You have rights and they are violating them.

-         Debt collection statute of limitations

This is an interesting one. Many people assume there are federal statutes for this, but there aren’t. The statute of limitations are set by individual states. So, for example, in Texas debt collectors have 4 years from the last date of activity in an account to collect the debt. Yet in Ohio debt collectors have a full 15 years to come after you for debts on written agreements and 6 years for debt on oral agreements.

-         Which state is a debt assigned to?

Generally, the laws of the state the debtor lives in apply. There may be exceptions though.

-         Debt collection letter

A debt collection letter is a letter written by the creditor to collect a debt owed to them. Sample debt collection letters can give you an idea of what to expect. They start out as simple reminders and progress into more serious demands as you fail to pay off your debt. The Fair Debt Collection Practices Act regulates what kinds of letters you can receive from collection agencies. For example, it would be illegal for a debt collection company to send you a post card demanding payment of a debt, because it would violate your right to privacy. Third parties can read postcards.

-         Debt settlement letter

This letter can be written by either the creditor or the debtor. A fill in the blank sample letter can make it very easy for you to prepare one of your own. Remember that a debt settlement letter is considered a written contract, so take your time getting it right. Once you agree to an arrangement, you are obligated. As mentioned above different states have different statues of limitations on debt.

Personally, I believe you should always honor your commitments, so you should pay off any debt, but if that is simply not possible, you should evaluate your options based on the statute of limitations as well. Lets say you have credit card debt. Credit cards are generally considered open accounts. So in NC the statute of limitations is reached after just three years, in California and Florida it would take four years and in Rhode Island debt collectors have a whole ten years to come after you.

-         Debt management

As a responsible citizen you should pay off your debt. There are many non profit organizations that will help you figure out a budget and a payment plan. There are also companies that will help you negotiate reduced settlements and debt consolidation loans to get your debt to an amount, you could reasonably pay back. The National Foundation for Credit Counseling can help you find a knowledgeable counselor in your area.

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