Debt collection agencies can sometimes be a bit over enthusiastic in their pursuit of an outstanding debt. It is not unheard of for a collector to threaten legal action just to scare you into paying up, rather than because they actually plan to take you to court. You can of course be sued for a debt you owe, but it would be unlikely that it would be the debt collection agency who were going to sue you.

Collection agencies tend to work on a commission basis for the companies that the money is owed to, so it is possible that the original company may indeed plan to sue you and be using the agency to implement their legal action. The other possibility is that the collection agency could have bought your debt from the original company, so that you now owe the money to them. In this case the decision to sue you or not would rest entirely with the agency.

The worst that can normally happen if you are sued, is that a court order will be made against you, which will mean you have to pay back the money owed at a rate the court deems to be fair. They decide what is fair by looking at your finances and making a judgement about what you can reasonably afford. Having a court judgement against you has lasting consequences, so you do not want to allow this to happen if you can possibly avoid it. The other thing to be aware of is that this is the first step in a legal process that starts to get more scary for you if you do not comply with the court order. Failure to do what the court tells you can lead to consequences that are a lot tougher.

Having a collection agency calling you day and night is no fun at all, but the last thing you should do is just ignore it and hope they will give up. This is unlikely to say the least. You have to show the company you owe money to that you are a decent person who wants to pay back the money, but just cannot manage it right now. You need to be seen to be taking it seriously and doing something to improve the situation.

The right course of action for you will depend on your circumstances, but the best starting point is to approach a good debt company and take advice. If you are struggling with substantial unsecured debts to a few different companies, you may well be eligible for a debt management plan. Unsecured debts include most things, except mortgages and home equity loans.

Letting your creditors know that you are starting on a debt management plan will send them the right signal that you are trying to tackle your debt problems. The process is also known as debt consolidation and means that you end up with only one payment to make to the debt company, instead of having to deal with lots of different creditors. Your creditors stop calling you because the debt company deal with them for you. The new payment amount you make should be lower than your previous outgoings, because the plan includes new repayment terms that normally reduce interest and other costs.

If you think this might be appropriate for you, it is very easy to apply to a few different debt management companies and decide which proposal you think is better. Just be cautious about which companies you approach, because not all companies that claim to offer debt help can be relied on to be honest. You can avoid being taken advantage of quite easily by just using recommendations for companies that are researched and known to be very well established and ethical. Use these recommendations to draw up a list and then apply online to about three of them.

Author's Bio: 

Read reviews and recommendations for the most reputable debt management companies in the US and UK. K D Garrow has worked as a senior manager with significant financial responsibility for the last twenty years. His website offers free help with debts, including unbiased advice on a range of debt related issues, including reliable debt settlement companies, IVAs, payday loans, bankruptcy and budgeting.