They say Ignorance is Bliss. This is not the case with Debt Collection Agencies. Credit Counsellors, State regulators say that ignoring letters from Debt Collection Agencies makes the matters worse. Try negotiating with your original creditors, but sometimes it can be too late. Here are some tips: Know your Rights: FTC has publications to educate you about the rights and best practices while handling debt collectors. Harassing phone calls, threats and abusive languages are illegal and should be reported to FTC. Do Not Ignore: It is important that you do not ignore debt lawsuits and work on immediately working it out with the creditors. If the debt is wrong immediately inform and correct as this could affect the credit scores. Find Consumer Lawyer: If there is a lawsuit served it is best to find a consumer lawyer. Sometimes statute of limitation on debts will be over, however, if the debtor is not present in the court, creditor wins the case. Keep Copies and Records: There is no exact time, on how long the documents must be kept, however, proof of settlement must be kept forever. Safeguard Bank Accounts: Courts can freeze your accounts which is a problem for people living paycheck to paycheck.

Debt solutions are bankruptcy are two totally different options. Although both debt solutions and bankruptcy can reduce your debt, they differ in respect to cost, time and the amount of debt that you can eliminate. In case you are in a place wherein you are required to choose between the two, you will first need to understand how each one works before you can make the choice. Understanding Debt Solutions: It is a method wherein you reduce the amount of debt that you need to pay your creditors. When you stop making payments to your creditors, you will need to contact a Debt Solution Company and send them money each month which they will in turn put in a savings account. After a certain amount of time, they take a chunk of your money and approach your creditors on your behalf looking to settle your debts. The Debt solution companies do the negotiation for you and try and get your creditors to settle your debt for a fraction of what you own. As you can always file for bankruptcy, your creditors will also be eager to negotiate a deal. Understanding Bankruptcy: There are several types of bankruptcy, the easiest of them being personal bankruptcy where you complete the required paperwork and file it with your nearest bankruptcy court.