Five things debt collectors are allowed to do

Although their tactics are limited by the Fair Debt Collections Practices Act, third-party debt collectors, those who collect a debt on behalf of another creditor are allowed to pursue these actions:

Seek payment on an expired debt

All unsecured debts, like credit cards and medical bills, have a statute of limitations. After this date, the debt is "expired" and you can't be sued for payment. But you still owe it, and debt collectors can still seek payment on these old financial obligations.

Pressure you

While debt collectors can't threaten you or mislead you, they can apply pressure to collect payment. This pressure can include daily calls, frequent letters or talk about pursuing a lawsuit for payment on the debt — as long as they stay within the bounds of the law.

Sue you for payment on a debt

Debt collectors can sue you for payment on a debt as a last-ditch effort. These lawsuits often result in wage garnishment, bank levies or both, because most debtors don't show up to court and lose by default.

A collector may resell debt it hasn't been able to collect on, or sell the remainder if only partial payment was made. So if one debt collector stops contacting you about a debt, don't be surprised if another starts. If you do pay off a debt in full, make sure you get the agreement in writing so you can prove it.

Negotiate what you owe

Because debt collectors buy debts for pennies on the dollar, they have fairly large profit margins if they collect the original amount owed. This gives them more flexibility in negotiating payment from a consumer. You may be able to negotiate a settlement for 25 percent or 30 percent of what you originally owed. Get the agreement in writing.