What action should you take with a debt collector threatening a lawsuit and you are unemployed in Michigan?

If the debt collector is not the owner of the loan or credit card, and they are not a lawyer hired by the company holding the debt, it is illegal under the Fair Debt Collection Practices Act for them to threaten to sue you. They do not have the legal ability or right to threaten to sue or to actually sue (unless, as I said, they are a law firm hired by the credit issuer or have purchased your debt.)

If a non-lawyer debt collector threatens to sue you for the debt, you should immediately contact the Fair Trade Commission and report the collector. This means that, without letting them know what you intend to do, you will have to calmly get the debt collector's information: Company, Representative's name, phone number and address (if possible), and time and date that the threat happened. The FTC will want all of this information.

Remember these basic rules: 1) Send a registered letter to the collector telling them they may only contact you via mail and may not contact your relatives or work by phone either. They must comply once you have received notice that your letter has been received. If they don't comply, report them to the FTC.

2) Never negotiate a payment plan if it has been seven years or more from the time the debt went into collection. They will try to trick you into this so that the clock is reset on the debt. Every time you make payment arrangements, you agree AGAIN that you have a debt and it will be another seven years before the debt is not legally collectable (it is 10 years in the case of taxes and other special circumstance debts).

3)Read the FDCPA booklet so you know what is allowed and what is not. It is important to know your rights!

4) Report EVERY infraction that a debt collector makes. It is free and can be done over the phone, on-line, or by mail.

One last thing: If you are threatened with a lawsuit by a lawyer that represents someone that hold your credit note, demand a copy of the original contract, the one with your signature. They may not be able to provide it which may lead to the debt being nullified (this means a possible court date). Even if they can get you a copy, the law says that all court proceedings must HALT for up to 30 days. This can, at least, give you some time to collect yourself and file a case of your own or what have you. If necessary, it gives you enough time to file bankruptcy and eliminate the debt altogether (this is a last resort remember).

of course remember the best action was always to pay debt you owe.