Settle With Collection Agency

You tried to pay off your debts, but the sheer size of them overwhelmed you. As a result, your debts were passed on to a collection agency. Now, instead of dealing with the original creditor, you're getting harassing phone calls from a debt collection agency. Some days, you wish you owed money to the original creditor, but those days are long gone. You just want the letters, phone calls, and nightmares to stop. What can you do?

First, Communicate

The wort thing you can do is ignore the collection agency. If the debt is especially large, the agency might believe it can win in court and decide to sue you. You don't want this to happen. Often, collection agencies purchase debt for pennies on the dollar, so the profit margin on your debt is really high. If there is enough of a profit margin, the agency will do everything it can to collect from you.

Open the lines of communication. Call the agency and explain to them that you'd like the letters and phone calls to stop, but that you're having trouble coming up with the money that they say you owe. You want to be honest and upfront with them, but you also want to come to some kind of arrangement where both of you can walk away satisfied. You will be surprised by the agencies response most of the time.

On occasion, you're going to run into a representative who is obnoxious, rude, and just plain mean. He may not care about your financial situation or appreciate the fact that you're making an attempt to pay your debts. If this happens to you, write a cease and desist letter to the agency. Request that all communication be in writing, and that you'd still like to come to some kind of payoff arrangement, but that the phone calls must stop. This should, at the very least, stop abusive representatives from calling you at home or at work.

Make An Offer

Offer an amount to the creditor. How much you offer is up to you, but keep in mind that collection agencies often purchase your debt for between $0.09 and $0.15 cents on the dollar. If you offer them, say $0.20 on the dollar, the collection agency still profits and you still walk away paying less than the original amount you owed. The collection process will be over and the agency will never bother you again. Of course, the agency can counter your offer. It's up to you to decide whether it's a good deal for you or not.

Get Everything In Writing

Even after the deal-making is done, get everything in writing. Without a written agreement, nothing is guaranteed. The last thing you want is to agree to something and then have the agency later ignore your original agreement, claiming the representative had no authority to cut a deal.

"Cease and Desist" Or Call For Help

As a last ditch effort, you could send a "cease and desist" letter like this:

Dear Collection Agency,

I have been constantly harassed by your company. I would like to come to some kind of mutually beneficial payment arrangement with you, but the harassing phone calls and letters must stop. Under the Fair Debt Collection Practices Act Section 805 (C), I am requesting that you cease all contact with me. With this notice, under the law, you can now only contact me:

  1. To advise me that your company's further efforts are being terminated.
  2. To notify me that your company may invoke specified remedies which are ordinarily invoked by such debt collector or creditor.
  3. Where applicable, to notify me that your company intends to invoke a specified remedy. Any other contact will be considered a violation under the Fair Debt Collection Practices Act, sec. 805 (C).

Thank you,
[Your Name]

The risk that you run with this approach is that the creditor is allowed to contact you one last time to tell you that all collection activity is being stopped or that they are taking legal action against you to collect the debt. You're basically giving the collector an ultimatum.

A wise alternative to the "cease and desist" letter would be to call a debt relief company. These companies can help you settle your debts for less than you originally owed, will immediately stop harassing phone calls and most written communication, and will also bring a speedy end to the entire collection process. You'll have to repay your debts, but you may end up paying a lot less than what you actually owe, and you can move on with your life.