Who of us hasn't had a strange envelope appear in the mail, sometimes with the debt collection agency's name on the outside, sometimes not?  If you haven't, then you're lucky, but, for those of us that have, there's a sudden sinking feeling right in the middle of your stomach.  Your mind starts racing, wondering what's inside, and what it's all about.  Some folks will actually leave the envelope unopened for hours or even days!

Now maybe you really are behind on your debts.  Next week, we'll talk about how you approach that, because it's an entirely different ball game.  But, for now, we're going to look at what to do when you really have no clue why you're getting the letter.

1.  Don't panic Captain Mannering!

Sorry, that's probably way too obscure for non-English TV humor buffs, but it comes from a Corporal Jones on an old TV series called Dad's Army, set in WW2, about a bunch of guys in the Home Guard.  Cp. Jones would utter this on most shows when something went wrong, which it inevitably did!  But the cry should be the same the moment you see the ominous letter lurking in your mailbox... DON'T PANIC!!

America is a big country - 330 million odd people.  The chances of you having a totally unique name are pretty small - worse if your name is Johnson or Smith (the 2 most common American surnames).  So it could be a case of mistaken identity.  Whatever the reason, don't put your head in the sand - at any time.  Open it, and read it with care, and with a cool head.

2. Make a plan of action.

Don't file it to "fix it tomorrow", in other words.  If you don't have the time to do something with it right there and then, put it somewhere prominent so you don't forget it, and put an entry in your diary or calendar to JUST DO IT!!  One thing you can bet your life VERY safely on is that these guys won't go away.  Often, it's a company who's bought the debt.  They don't know you or your debt at all and, rest assured, they want their pound of flesh.

3. Take a letter Maria.

Yup, get out the pen and paper, or the desktop/laptop, and get writing.  Although the collectors are under no obligation (generally) to write back to you, it's really in their interests to do so.  They will want to know they're pursuing the right person and a legitimate debt.  If for no other reason than they want to mitigate getting sued for harassment. 

So what to write?  Start off by referring to their letter - even of you enclose a copy, which is a good idea.  If you've never heard of the debt or from them before, say so.  Ask them to provide the following:

The amount of the debt;
the name of the creditor to whom the debt is owed;
a verification or copy of any judgment (if applicable);
proof that they are licensed to collect debts in (insert the name of your state)

Also set out your rights, and what action you want and will take.  You can find a sample Initial Debt Dispute letter by following the link.  Note that laws are different from state to state and you should check before using this letter without altering it to ensure you are quoting correctly for your state.  But the basics hold true across the board.

4. Follow up.

Don't assume you're going to get an answer or that your "pseudo-attorney" letter will make them scurry for cover like frightened rabbits.  Give them 3-4 weeks, and then follow up by enclosing a copy of their letter and your initial one, asking why you haven't heard from them and what is happening.  Remember, at all times, to stay calm, focused and polite.  You'll get a lot further much faster.

5. No dice.

So they came back to you, with or without giving you the information you asked for, and still maintain that you're the debtor.  What now?  If you have Pre-paid legal, you wouldn't be in this spot now probably.  You could have had your provider-attorney send a letter back at step 2 (rather than yourself) and it's very likely it would have all gone away.  According to David Bloom of Evans, Lowenstein, Shimanovsky & Moscardini, Ltd, the pre-paid legal provider-attorney in Illinois, "One PPD member contacted our office about a debt he didn't think he owed. Under his Pre-Paid Legal Service plan, we drafted a letter to the attorney for the collection firm, requesting proof of the debt. They couldn't produce these documents and therefore they dropped the legal action," Bloom said. "In all too many instances, these debt buyers and their legal counsel are counting on uninformed consumers to simply pay up, whether the debt is authentic or not."

But, assuming you hadn't purchased a plan ahead of time (unfortunately getting one now will not get you a free letter), you can still go to an attorney, you can just pay the debt (and probably get your credit history pinged), or you can continue to fight.  Keep sending them letters, find some Internet sites that deal with these issues and post on them.  Talk to your local paper or TV station - especially if news is slow, they may jump on the chance!

If you find the debt is really yours, well there's not much more to say.  You're going to have to deal with it.  But watch for next week's entry on ways to cope with debts that are yours.

The big thing is to be proactive.  Keep onto them, and keep copies of everything.  If ever you end up in court, the judge will look favorably on you if you can produce all your evidence.  That's why you should NEVER do anything over the phone.

The other important thing is be proactive before the event.  For a very small monthly amount, you can help protect yourself by having a top attorney firm on your side, on retainer, to help you deal with these life event problems.  Also, they'll review documents and give advice for free on an unlimited number of topics.  And get a will done too.  Contact us to find out how.