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. It is best to have separate accounts for disability checks or social security as it is exempt from account freezing.
Withhold information: It is not important to divulge all information to the debt collector and routing numbers. May payments through money orders or third-party checks.
Record Everything: If the debt collectors are abusive or threatening, record the incident via video or audio. In some states, you need permission to record.
Get it in Writing: All debt collection payments must be taken in writing avoiding future misunderstandings.
Debt Management: Get certified credit counseling help.
Avoid Judgment collection, a court-mandated collection if the judgment goes against you which you need to abide as local sheriff can be brought to collect the debt.