Sometimes, due to events beyond our control, we find
ourselves strapped for cash and unable to pay our bills. Although the situation
may be temporary, such as a layoff resulting from corporate "downsizing,"
an unanticipated medical emergency, or maybe a divorce, you must never hide from
your creditors. Deal with them and try to work out a way to pay the debt.
If you tell the truth and explain your inability to pay, they may agree to adjust
your payments (a temporary restructured payment plan), such as allowing you to
pay interest only for perhaps six (6) months, while you get back on your feet.
Some may even agree to not report this problem to the credit reporting agencies,
provided you keep your part of the bargain and get back on track as quickly as
possible. Unfortunately, if you are unable to either make payments or reach a
workable payment modification with your creditors, here's what you can expect:
You will be pursued by their "in–house" collection department by phone, mail, fax, or a combination of all three.
If, and when, a creditor determines that its "in–house" team cannot collect the debt, your account will be forwarded to a "third party" debt collector.
What is a third party debt collector?
A collection agency, individual, attorney, or any other entity, other than the original creditor, who regularly collects debts owed to others. These debt collectors work on a commission basis. Therefore, they tend to much more aggressive than "in–house" collectors.
What can you do if you are being harrassed by third party debt collectors?
Because they work on commission, some third party collectors have been known to use unethical tactics when pursuing consumers. If you believe that a collector is harassing you, or would prefer to deal directly with the original creditor, The Fair Debt Collection Practices Act gives you the right to send them a Cease Communication Letter.
The "Cease Communication" letter informs the collector and their collection agency that they may no longer communicate with you regarding this debt because you wish to settle your debt with the original creditor.
Once the collector receives your letter, they are prohibited from contacting you again except to confirm that there will be no further communication. But, they may contact you in the event they, or the creditor, intend to take some specific action.
To prevent the collector from claiming that your letter was never received, you must send it via CERTIFIED MAIL, RETURN RECEIPT REQUESTED. (Incidentally, if you are being harassed or threatened by an individual claiming to be an attorney, and they collect accounts on a regular basis, you can use the same letter. But remember, if an attorney is acting as a third party collector, your time frame for delay may be shorter than with a traditional collector, since they are in a position to file suit more quickly.)
IMPORTANT NOTE:
You should not view the "Cease Communication" letter as a way to avoid your debt. You are neither legally, nor financially off the hook. You should only consider it a tool to stop abusive conduct or harassment from an aggressive, commission–driven, third party debt collector in order that you may have a reasonable period of uninterrupted time to reach acceptable payment arrangements with the original creditor.
You cannot use a cease communication letter with the original creditors "in–house" collection department. Because they are the original creditor, they can call you practically any place and any time they want.
Also, in some cases, because the third party debt collector is paid only on money collected, they may be willing to negotiate a settlement between you and the creditor.
