Monday, August 16, 2010

Send a Cease and Desist Letter to Debt Collectors

The phone rings...and rings...and rings...but you don't dare answer it. Why not? Because there's no question that there's a debt collector on the other end who simply can't wait to rip you to shreds (or attempt to, anyway) because (gasp!) you haven't paid your debt.

Cry me a river Mr. Debt Collector.

What you may not realize is that the Fair Debt Collection Practices Act gives you the right to say "STOP" to any collection agencies who feel the need to contact you incessantly and prevent you from taking a nap, enjoying a family dinner, watching an evening movie, etc. You shouldn't have to change your phone number just because of an old debt that won't die peacefully. This is where the Cease and Desist letter comes in mighty handy.

Cease and Desist Letters.

The Cease and Desist letter is merely a written demand that a collection agency immediately halt all contact with you. You don't have to pull a sample cease and desist letter off the internet to accomplish this goal. As a matter of fact, its much better for you if you don't. Truthfully, you don't know who those people are and you don't know who wrote those letters. Do you trust that all the supposed "legal" jargon is airtight? No? Me either. As a matter of fact, some of them make me cringe.

All you need to do is notify the collection agency that contacting you is inconvenient and you are enacting your rights under the FDCPA to request that all contact immediately cease. Period. You don't have to be a jerk about it and you don't have to try to sound like an attorney. Just tell them to knock it off.

The Risk Associated With Writing a Cease and Desist Letter to a Collection Agency 

When you strip away a collection agency's ability to contact you, you give it no viable method to collect the debt. Sure, it will continue to quietly update your account with the credit bureaus, but for many debt recovery companies, that just isn't enough. Cutting off all contact is a quick way to get yourself sued.

I know what you're thinking. "But Lee, you said collection agencies rarely sue!" Yes, yes, I did. However, this is one of those occasions in which they do sue – and frequently. You're leaving them with no alternative.

Once a collection agency recieves your Cease and Desist order, the FDCPA allows it to contact you further in either of the two following situations:

1. To inform you that it won't be contacting you anymore.

2. To inform you that it plans to invoke a "specific remedy" to collect the debt. 

Yes, the first scenario is nothing more than a waste of paper. The second, however, just screams lawsuit. The FDCPA doesn't come right out and say it, but it so much as endorses the fact that the collection agency can sue you if you slap it with a Cease and Desist.

Check the Statute of Limitations

We've talked about the statute of limitations before, remember? This is the amount of time a collection agency can legally file suit against you in your state. I only advise that debtors send cease and desist letters once they are 100% certain that the statute of limitations has expired and have some sort of proof to back up that fact.

Proof of the statute of limitations isn't hard to come by. All you need is a copy of your credit report. The original creditor's charge-off date should be right there, glaring at you from that negative trade line. In this case, however, that charge-off date works in your favor since this is the date that starts the statute of limitations for your state.

If you're feeling squirrley (and you should be) before you send that Cease and Desist letter, send a letter to the collection agency asking for the name and address of the original creditor for the debt. Federal law says that if you ask, they have to give it to you.

Once you've got a written statement from the collection agency acknowledging that the original creditor is, in fact, the original creditor, and you've got a charge-off date to work with, you should have no trouble proving that the statute of limitations has passed. If the collection agency wants to sue, bring it on. You've got an airtight court defense. Just remember to show up – if you don't you'll have a default judgment on your hands.

Limited Cease and Desist Letters 

One answer to this, according to some, is the limited cease and desist letter. A limited cease and desist letter tells the collection agency to stop contacting you...but only via one method. For example, if you just can't handle the phone calls anymore, you could send a limited cease and desist notice letting debt collectors know that they can't call you, but they can continue to communicate with you via mail.

While I can't deny that this works in some cases, it doesn't work in all cases. Lately, collection agencies have become gun-shy as more and more consumers stand up for themselves and file lawsuit after lawsuit against their collectors for FDCPA violations. Because the FDCPA makes no provision whatsoever for the limited cease and desist letter, you have no way of knowing if your creditor is going to take it at face value and simply stop calling, or give the letter the wide interpretation of a full Cease and Desist order – thus putting you in just as much danger of a lawsuit as if you'd forbidden any contact at all.

Wait Out the Statute of Limitations Before Sending a Cease and Desist Order

My advice to you is not to test the water with a limited Cease and Desist. Get Caller ID (as if any phones come without it anymore) turn down the ringer, and give any callers who aren't debt collectors a call back at your leisure. Although changing your phone number is a hassle, its usually successful. Unless someone you know decides to hand out the number to a debt collector, there is very little way for debt collectors to get their hands on your new number.

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