Credit Reporting

• Debt-recovery agents, or bill collectors, can legally report the status of delinquent accounts to the three major credit bureaus -- Equifax, Experian and TransUnion. But if they know the debt is false, outdated or the result of identity theft, they cannot legally damage a consumer's credit rating. Collections accounts negatively impact credit ratings for seven years from the date of the original missed payment, according to the Fair Credit Reporting Act.
  
  

Policies for Contact

• Under the Fair Debt Collection Practices Act, debt collectors can call you between the hours of 8 a.m. and 9 p.m. in your time zone. If you demand in writing that they stop calling, they must comply or be subject to fines. Debt collectors cannot use abusive or threatening language, nor can they discuss your account with other parties unless you give permission. They also cannot send you postcards about your debt and must give you basic details about their company and the debt owed in any letters they mail to your home.
  
  

Credit Counseling Options

• If you cannot pay your debts as promised and are tired of dealing with collectors, you can consult with a credit counselor, notes the Federal Trade Commission. Your credit counselor can sometimes renegotiate your debts into more manageable monthly payments. If you enter a debt management program, you cannot get any new credit while in the program. But your creditors are not supposed to contact you and instead accept payments as agreed from your credit counselor. You make one monthly payment to the credit counselor; he distributes this to your creditors as agreed and takes a modest administrative fee.
  
  

Bankruptcy Options

• If your financial situation is dire, you can request full bankruptcy under Chapter 7 or partial bankruptcy under Chapter 13, notes the book "How to File for Chapter 7 Bankruptcy." Once you declare bankruptcy, all debt-recovery agents must stop calling and writing you. They also cannot sue you or garnishee your wages unless a bankruptcy judge denies your request. Bankruptcy will not resolve all debts, however, including recent tax bills, child support and alimony.