Friday focus: Personal finance

Tough times mean that debt collectors are talking even tougher. And they will scare you – make no mistake. As more consumers have a far harder time paying their debts in this recession, they must understand there are good ways, and bad ways, to respond to collection calls.

Debt collectors do not always tell the truth – or play fair. Sometimes, a few go to the extreme to get money.

Consumers facing the calls must do three things:

•Maintain detailed written records. When a debt collector first calls, simply ask for a letter in writing to explain the amount owed and to whom it is owed.

You have a right to receive a written validation notice within five days after the collector first contacts you.

Mail letters to the collector by certified mail with a return receipt. Make photocopies of all letters that you send.

Consumers should keep a file of materials relating to their credit history, which includes copies of their credit reports.

•Stay calm and know your rights. A debt collector may not contact you before 8 a.m. or after 9 p.m. unless you agree to it. Keep a log.

Say as little as possible when you talk to a debt collector. The more information you give them, the more information they can use against you.

•Do what you can to pay, but have the correct documents to avoid more trouble.

Get your credit report to verify who holds that debt now, and make copies of everything.

Debt collectors in most cases must take you to court before garnisheeing wages. Federal student loans are an exception.

Consumers always should get the collector to verify a payment plan in writing. You also can write a letter back confirming the details. Again, keep copies.

Last year, the FTC and the state of Nevada charged 10 related Internet payday lenders, mainly based in Britain, with falsely threatening consumers with imprisonment, continually calling the consumers at work and telling friends or family about consumers’ money troubles.

The recession makes it tougher for many consumers to pay bills. As a result, more consumers need to know their rights – and how to put a stop to the harassing phone calls.

Detroit Free Press