Why I Recommend Against Sending Cease Communication Letters to Creditors
Imagine that you loan someone $10,000 with the understanding that they will pay you back on a monthly basis with interest. After a while, they fall behind on their payments, so you call them to discuss their financial status and encourage them to make a payment. But they dodge all phone contact and you’re not sure they are even getting your messages. No return phone calls. No contact. Nothing. Then you receive a letter in the mail that says something like this: “Pursuant to my consumer rights under the Fair Debt Collection Practices Act, I hereby demand that you cease and desist from any further attempt to contact me by telephone. Any further attempts at telephone contact will result in my taking legal action against you for violating my rights under Federal law.”
What would you do in this situation?
1. Meekly go away and make no further attempt to collect?
2. Ignore the demand and continue calling anyway?
3. Turn it over to a collection attorney?
The smartest thing to do in this situation would be to file a lawsuit against the debtor. When you look at it this way, it seems obvious that sending a cease communication notice to a creditor is a pretty dumb thing to do. It makes no sense at all if your goal is to work out mutually agreeable settlement arrangements with your creditors. Yet there are hundreds of debt settlement companies out there still using this obsolete and dangerous technique, not to mention countless debt information websites that recommend this approach and even provide sample letters.
When I first started doing debt negotiation in 1997, I worked hard to get the creditor to substitute my phone number for that of the client, so cease communication notices were rarely necessary because the creditor could contact me for an update any time they wanted to. I would only use cease communication notices with truly abusive creditors, the ones who refused to respect the rules and continued to harass or abuse the client even though they had received my power-of-attorney to speak on the client’s behalf.
Fast forward a few years. In the process of developing the operational procedures for a large debt settlement operation that handled thousands of clients, it became obvious that we would need an army of people just to field the auto-dialed calls from the creditors. Instead of this unworkable solution, we made the decision to coach consumers on how to screen the calls, report abuse, and generally tough out the collection process until we could negotiate realistic settlements on their behalf. This worked fine, and cease communication notices were usually unnecessary. Unfortunately, many other companies took the easy way out and simply sent out “C & D” letters to every creditor in the client’s file. This was done automatically, and without any analysis with respect to the frequency of the calls to the client or the nature of those calls. The result? A bunch of really angry creditors, a big increase in lawsuit activity (what other choice was the creditor given?), and a lot of unhappy clients.
Sadly, years later many companies and websites are STILL using or recommending this technique. Type “cease communication notice” into your favorite search engine and be amazed. I just did it and turned up more than 1.5 million hits!
Sending a letter like this is the exact OPPOSITE of the approach that I teach. What works best is communication in good faith. This is simply a matter of common sense. I’m not saying that you should subject yourself to abuse or harassment. But in that type of situation, a complaint letter is often more effective than a cease communication request anyway. Obviously, you also need to take measures to manage the volume of collection calls, which is simply a matter of screening. But it’s important to keep your creditors informed, let them know you haven’t disappeared or tried to skip out on your obligation, and that your intentions are to work things out when you have the resources to do so. Patient persistent explanation of your situation will win the day in the end.
It’s pretty simple, really. If you want to settle with your creditors, talk to them once or twice per month until you work out a deal. If you want to get sued, send a cease communication notice.
The purpose of a cease communication letter is to stop those that are not willing
to work out terms or negotiate with respect to the debt. Often times, a credit
card debt is only $150..but with fees, they quickly escalate it to $900 or even
$1000!!! Obviously, collectors are supposed to negotiate terms and collect,
however, some companies like I.C. Systems, BCR (bureau of collection recovery) and
others insist on abusive tactics.
Funny short story. I had BCR call me 28 days straight to collect on a debt.
Why is that funny? Because I wasn’t the person they were trying to reach, yet
they refused to stop calling me, AND, refused to update their records.
Cease communication is an equalizer for those companies that don’t want to
settle. They can always write you with an offer. Your cease letter may be
directly to telephone calls.
They’ve worked great for me and my clients, most of the time, it gets the lousy
Comment by Mr Brownstone — March 19, 2007 @ 10:18 pmcollector back to negotiating….because they are limited to paper unless my
client calls them. This type of ‘turn of the table’ forces them to either
revert to the original creditor or start bargainging. Getting sued, although
a threat, just doesn’t happen. The person on the phone actually needs a retainer
on file…and they never have that authority.
Regarding the above comment by Mr. Brownstone, I want to clarify
the difference between dealing with an original creditor (OC) versus
a third-party collection agency (CA). In my post above on the subject of
cease communication notices, I’m mainly referring to OCs. It’s simply
deadly to send a cease communication notice to an OC. With several
of the major credit card banks, receipt of a cease communication notice
translates immediately into the account being placed with a local collection
attorney, who IS authorized to file a lawsuit. I’ve seen this time and
time again.
When you are dealing with CAs, it’s a different story. Even there, however,
I recommend against use of cease communication notices unless absolutely
necessary. As I noted in the original post, “I’m not saying that you
should subject yourself to abuse or harassment.” If a collector has crossed
the line of allowable behavior, then the cease communication
notice is an appropriate response.
What I object to strongly is the blanket use of cease communication
notices by the debt settlement industry. It is a technique that has
been overused for many years, and there is a clear pattern of increased
litigation when this technique is applied to original creditors. It should
not be automatically used with collection agencies either, but reserved
for situations where it makes sense to bring a collector in-line who
is using harassing or abusive techniques.
Really, if you want to settle your debts, sending a letter telling
Comment by Charles — March 20, 2007 @ 11:56 amthe creditor/collector to not call you anymore is the wrong approach.
Just get on the phone and haggle your way to a deal!
I have no debt of any kind, zero.. (no credit card debt, no longer any student
loans, my car is paid off, and no mortgage) yet this year I’ve received
a huge number of phonecalls, mostly from BCR, all of them either
not giving a name, or giving the name of someone other than myself. I get a good half dozen such per week, every single week, and if you add the blank messages
which are probably mostly those, probably over a dozen a week, if not much higher.
The above by Mr. Brownstone about BCR refusing to update their records is exactly what I feared that a google search would turn up in terms of BCR’s behavior.
Here is my question: does the law allow me to send a cease and desist
letter to BCR, even though I don’t owe a debt to anyone (much less to them)?
Or does the law only apply to someone who DOES owe a debt?
If the latter, then what option do you have when you dont’ owe any debt but keep getting those calls?
Thanks
Comment by Harel — June 3, 2007 @ 10:29 amRegarding the above comment/question by Harel, it’s clear that the
Fair Debt Collection Practices Act (FDCPA) does not require that a
person owe the debt in question in order to utilize the provisions
of that Act. In fact, one of the key reasons the FDCPA was passed
was to protect consumers from collection activity on debts that are
disputed, and/or in cases of mistaken identity or identity theft.
So a cease communication notice would definitely be appropriate
Comment by Charles — June 3, 2007 @ 4:34 pmunder the conditions described, where the collector clearly has the
wrong person. Perhaps a better strategy though would be to use the
provision of the FDCPA that allows a consumer to demand validation of
the debt in question. A collector is required to suspend collection
activity until verification of the debt is obtained and mailed to the
consumer requesting it. Such written communications to debt collectors
should always be sent via Certified Mail with Return Receipt required.
Thanks for the quick reply. That is good to know that I can send
Comment by Harel — June 3, 2007 @ 9:08 pma Cease and Desist. As for the second strategy, could you include the url
for a page that gives the details (or even a form letter one could modify)
for this “demand for validation of the debt in question” thanks.
There is no specific URL on my site pertaining to this, but
nothing special is required. State your name and address, the date
of the letter, and address it to the agency that’s attempting to
collect. Include their reference number if you have a written
notice from them. Then state something like the following:
“Please provide verification of your claim under the referenced
account number. I hereby request copies of the original account
agreement, a record of all transactions on the account from inception,
and any other documentation that will support your claim.”
Then sign and print your name, and you’re good to go. I’ve seen
Comment by Charles — June 4, 2007 @ 12:18 pmlots of versions of this letter, and most of them are overkill. It’s
not necessary to cite specific FDCPA provisions or go into great
detail. Basically, all you’re saying with a validation letter is,
“Prove to me that I owe what you claim I owe.” Then the burden of
proof is on the agency doing the collecting.
Very good advice. This is what I tell a lot of people. Sending the cease and desist letter only stirs a hornets nestwhich is not a good thing. If you are looking to arrange a settlement and do not want to deal with collection calls than the only way to do this by law is to hire an attorney for your settlement arrangement, who by law can stop the calls to you, but keeps the lines of communication open, your creditor or collector has to deal with your attorney. But nevertheless keeps hte calls away from you but leaves your collectors the feeling that they know something is being done to collect the debt, so then they will not push forward with a suit.
Comment by Steve "The Debt Settlement Man" B — June 11, 2007 @ 10:39 amThe above comment is a “plug” for hiring the services of a debt
Comment by Charles — June 12, 2007 @ 8:25 amsettlement attorney. That’s ok. I don’t mind if people from the
settlement industry post comments on my blog. If you’re considering
the debt settlement approach, go ahead and shop the services of several
companies. You’ll find that most non-attorney settlement companies charge
around 15% of your total unsecured debt, and some of the settlement
attorney firms charge even more (up to 25% in some cases). Once you
recover from “sticker-shock,” then pause to consider that you can block
most unwanted collection calls through a combination of caller ID and
privacy management services or devices. Total cost? Maybe $100-150.
There are limited situations where it makes sense to get some professional
help. But this is the exception rather than the rule. Most consumers
can handle the problem just fine on their own, with a little coaching
and training from yours truly.
I have a disputed disconnect bill with a cell phone company who did not provide adequate ongoing service for
Comment by PAT BATES — September 8, 2007 @ 8:20 ama period of two years. (Towers were insufficient.) Fed up, I refused to pay the remainder of my contract. They are still hounding me three years later fr $150 disconnect fee -now up to $184. This is a priciple thing. It has gone through several collection agencies and is now with one who continues to call me 24/7. The first time I returned their call I ask who they were and what was the purpose of their call. They required me to identify myself and when I did not, hung up hung up on me! ANother time I told them the call was being monitored and recorded and they told me I couldn’t do that because it was illegal. I told them n t if they were aware of it. They again hung upon me.. It is apparent they are wanting me to say YES to identify myself as the person being called. Their telephone numberi s unlisted but I finall tracked them down and intend to go to the attorney general’s office if I can find what state they are located in. Any comments or insight? I have an excellent credit record. I pay my bills but will be damed if I pay for servicenot rendered. I have half a town of five hundred who woud back me up in court. Any comments.
In response to the above comment/question posted by Pat, this is a situation
Comment by Charles — September 10, 2007 @ 9:02 amwhere it definitely makes sense to use a cease & desist communication
notice to stop the harassment. The trick, obviously, is to identify the
agency responsible for these collection calls. If you can identify the
name and address of the agency, a cease communication notice should be sent
via Certified Mail with Return Receipt. If calls persist after that, a
formal complaint to the state AG (your state and the state the collector is
located in) would be appropriate. I would also suggest filing complaints
against the phone company provider that initiated this collection activity.
It’s possible though that the debt has been sold to a debt purchaser, so
the original provider may no longer be involved. Besides the cease
communication notice, another technique is to write to the collection
agency and demand verification of the debt in the form of supporting
documentation. It’s fine to have one letter that does double-duty –
a dispute of the debt along with a demand to cease attempts to make contact
via telephone.
So, I guess the “ignore the Anonymous or 999-999-9999 calls”
Comment by Heather — September 23, 2007 @ 10:23 amis not a good tactic. But, every time I DO answer the phone,
I talk with someone different about the SAME thing and they
act as if none of this information has been documented in my
file with them. Is that the case? If so, then what is the
point of sounding like a broken record, why not just ignore
the calls until I AM ready to offer something?
Ignoring creditor or collector phone calls completely is never
Comment by Charles — September 24, 2007 @ 10:05 ama good tactic. But it also makes no sense to answer the calls
live as they roll through. For one thing, the calls are computer-
generated and there are simply too many of them. A better technique
is to screen the calls to voicemail. Most will be hang-ups with no
messages. But some will leave a message. A once-per-month callback to
a collection agency (more if it’s the original creditor) is useful,
even if they are not making very good notes in your file. By having at
least some contact, you can cut down on attempts to reach you at work,
or through relatives or neighbors. And it can also keep you in the
loop enough to know when a settlement opportunity has developed.
I have been receiving calls 5-10 times per day, usually by different people,
Comment by Heather — October 27, 2007 @ 9:08 amfrom a Law Firms called “Mann-Bracken, LLC”. I finally called someone back, and I am aware they are collecting on a debt that I owe. THe debt has gone from $3,000 to over
$5,000 and I do not know what the charges are that have increased this debt so much. I offered to make payments to them but they refused and said I needed to pay the debt in
full or I would be sued. I absolutely can not do this. While on the phone he scared me by telling me that my wages may be garnished. This was after I gave him my employer name, income amount, monthly bill amount, and name of who I bank with. At the beggining of my call he also asked me to verify the last four digits of my social security number. NOw I have looked at al these sites online and am scared that my already low income is going to be garnished. Is it possible for them to realy do this, and if they are really interested in recovering this debt why will they not accept payments from me?
In response to Heather’s comment above, the threat of wage garnishment
Comment by Charles — October 29, 2007 @ 4:30 pmis frequently made by debt collectors. However, a creditor must first file
a lawsuit against you and obtain a judgment in civil court before they
can garnish your paycheck. Also, most states have some provision where you
can argue to have a garnishment reduced if it would cause severe hardship.
The reason they are not interested in payments is simply because collection
agencies work on commission, and they want the full commission now rather
than having to wait for it stretched out over a period of months or years.
If the matter escalates as far as an actual lawsuit, then you should get some
legal help to respond to the lawsuit so they don’t get a quick default
judgment against you. So far, it just sounds like typical collection pressure.
Also, bear in mind that it’s usually possible to reach a settlement where
you pay only 50% or less of the present balance. It would be necessary,
however, for you to have that amount available in a lump sum payment.
In 2005 my back went, I am an independant contractor, no health insurance and could not work, I already had credit card debt but incurred more in attempt @survival thinking I was going to get better and be able to pay and everything would be all fine. Didn’t happen, had to have surgery, was unable to function for over a year and as a result ended up with about 50k in revolving card debt. I am able to work now and do, however I amke just enough to survive on, there is no extra to take care of this debt with. I have one judgement for over 13k placed against me and everything else is still out there somewhere in collections. I have met with an attorney regaurding bankruptcy and would likely loose my house as well as my tools, which I use to work and make what I can. It would cost about 4k to do the bankruptcy, which I don’t have and have no way of getting. I drained what retirement funds I did have saved in paying the cards as long as I could. Its been about 2 years now since I stopped paying. There is no point in speaking with anyone of them as I have nothing to offer them. The original debts have all been sold off, and show as charged off on my credit. I would love to be ale to pay them off and make it all go away oviously, however hat is not an option. They will show until 2012-13 on my report as it states. At that point will I be able to start rebuilding my credit again? I had never missed a payment or been late in over 20 years with loans of all sorts and had prfect credit till all this happened. I have an auto payment, a line of credit on my checking and my mortgage which are all current. Does this do anything for me or is all lost reguardless?
Comment by Rick — December 26, 2007 @ 6:02 pmRick, you don’t need to wait until 2012-2013 to begin rebuilding your
Comment by Charles — December 27, 2007 @ 9:28 amcredit. Get yourself a copy of “Credit After Bankruptcy” by Snyder.
Even though you have not formally declared bankruptcy, the principles
of rebuilding credit are the same either way. What a lot of people don’t
understand is that the 7-year reporting period is very misleading. Yes,
it’s true that derogatory entries will remain for that long, but this
doesn’t mean that a negative item carries the same weight when it’s 6-7
years old that it does when it’s fresh. In the debt settlement strategy,
for example, most clients recover to an average credit score within about
two years after settling the accounts. Get your credit reports with scores,
so you have a baseline to measure from. Then, get yourself 2-3 secured
credit cards, so you begin adding positive payment history. Your existing
car loan, mortgage, and creditline will all contribute positively to your
score. The effect of the negatives will fade with time. One caution
though. Your main problem, as I see it, is not bad credit. It’s the
unresolved status of these accounts. You should strive to settle these
accounts one-by-one, as best you can, in order to reduce the risk of
additional lawsuits/judgments. Judgments show up in the public records
section of your credit report, and will remain in force for up to
10 years (and can be renewed in some states). An unresolved judgment
can lead to wage garnishment, property lien, or bank account levy. So
your first priority should be to resolve that outstanding judgment,
and to avoid any more!
Thank you for your response. Yes, I am concerned about further action on behalf of the remaining unresolved debts as well, however I am just simply incapable of resolving them given the magnitude of them, they are all thousands of dollars each. I borrowed from a friend back in 2005 amidst the whole mess that I am still trying to pay back, and that to me, comes before the creditors. Unfortunately, all the money I borrowed from her went to keeping the payments on all of these debts current and paid at that time (which now I wish I had never done), but it just all got out of my control. I sold off anything I had that wasn’t nailed down trying to avoid all this but it didn’t stop it from happening. I think I am going to have to have my parents open a checking account in dads name that I can use off the radar so that it can’t be frozen. Thanks again.
Comment by Rick — December 27, 2007 @ 7:38 pm2 years ago I terminated my telephone and DSL before moving into my new home. For reasons I have been unable to ascertain, the provider cancelled the phone, but created a new phone number for the DSL and billed me. I disputed this charge and was told the situation was rectified by a customer service rep. However, 6 months later I received a collection notice. I replied with a dispute letter, and never heard from that particular agency again. Last month, I received a new collection notice, from a new agency, about the same charge. I sent the new collection agency a dispute letter, and they replied with a copy of the original disputed bill from the DSL provider. Would sending a cease communication letter end this saga? The bill is under $100, but I don’t feel I should have to pay for an error on their part, and I’ve read on many finance blogs that paying the collection agency will likely result in being charged significant additional late fees. Any advice is much appreciated.
Comment by Chris — January 4, 2008 @ 11:06 pmChris, sending a cease communication notice will not resolve this type
Comment by Charles — January 7, 2008 @ 8:47 amof situation. It will only get them to stop calling you by telephone. In
my view, a cease communication notice in this situation could actually
increase the probability that they will resort to filing a lawsuit in
small claims court. It would be far better to resolve the problem directly
with the original provider and get them to withdraw placement of the bogus
bill with 3rd party agencies. Otherwise, it will just rotate from agency
to agency and you’ll keep receiving collection activity.
Thank you for all the great info on this page. After several terrible years in business with some terrible people, I am left with $105k in credit card debt. 10 of 12 accounts have been charged off last month (not sold yet) and the remaining two accounts are probably C/O’d by now. Also there is a pending $25k suit (unsecured) for which I really have no viable defense. Obviously, I have screened a barrage of calls over the last six months, not a single one of which I’ve taken though. I was all set to send out the C&D letters until I read your page. My question is whether or not I can send a “conditional” C&D letter to instruct them to communicate with me only via mail and further, not to communicate with any third party (calling my grandparents). Thank you for your time.
Comment by JR — January 30, 2008 @ 1:10 pmIn reply to JR, there is nothing “conditional” about the language
Comment by Charles — January 30, 2008 @ 2:45 pmyou’re using to describe a C&D letter. Basically, a C&D letter instructs
the debt collector to make contact only by mail. That’s the definition
of a C&D letter. So there is no advantage at all in trying to parse the
words in the way you are suggesting. In general, it remains a very
dangerous technique to use. There are many collection agencies that
have working relationships with a network of collection attorneys.
When they receive a C&D letter, they simply forward the file to the
attorney to proceed with litigation. So you can actually trigger an
aggressive response by using this approach. It’s better to screen the calls,
communicate by phone once a month or so, and haggle your way to
settlements on the account.
I recommend against C&D letters except in special situations, as
described in some of the above comment replies I’ve made to specific
individuals.
I have creditors calling my job and I am unable to making any arrangements to pay them bak. I am recently divorce and I have had to move to another state because of the employment issues in the state I use to live in is horrible to say the least.
Comment by David — January 30, 2008 @ 7:00 pmDavid, I recommend you seek help from local legal aid services or
Comment by Charles — January 31, 2008 @ 2:13 pma competent attorney. Sending a C&D letter to these creditors might
actually escalate the situation into litigation, and then you’d be
in even worse shape.
I have an old student loan that I was sent to collection because I made advanced
Comment by Tanya — February 29, 2008 @ 9:35 ampayments with the provided pay slips. I attempted to have the account removed
from the collection agency & was told by the school that it could not be undone.
I made payments to the collection agency until they would not tell me how much
more I owed & how much I had paid. Instead they wanted more money per month.
I stopped paying about 12 years ago and apparently the debt has been sold and now
a new creditor has just called my job. I finally managed to obtain a copy of all
of my payments & it shows that I was paid in advance. I have again offered to pay
the school the original amount owed, no collection fees, because this was not my
error. What else can I do?
Tanya, your best bet in this case is to send a validation letter to
Comment by Charles — February 29, 2008 @ 1:06 pmthe collection agency, not a cease communication notice. That’s where
you request that the agency provide proof that you owe the claimed amount.
Tell them you dispute the debt, and request copies of supporting documents
in the form of the original loan agreement, as well as an accounting of
all payments received since inception of the loan. Send the letter via
Certified Mail, with Return Receipt required. They are supposed to stop
collection efforts until they obtain and mail the requested verification
information. This often works as effectively as cease comm. notices when
dealing with debt purchasers, because they very rarely have the actual
documentation to prove the claim.
I have been off work since the beginning of December. All bills were paid on time until savings ran out. I started logging calls on Jan 15, 2008. Since then I have logged 377 calls from HSBC and 86 calls from Capital One. I usually answer some of these calls on Mondays and Fridays under the assumption that it would keep them informed. Silly me, not to happen. What should I do?
Comment by Greg — March 1, 2008 @ 4:40 pmGreg, if you are asking whether you should send C&D letters just because
Comment by Charles — March 3, 2008 @ 8:54 amthe banks are calling frequently, my advice is that you should not send
such letters to a creditor. Instead, it makes more sense to simply continue
to screen calls using caller ID or a privacy manager service (often
available through your phone service provider). Stay in communication with
your creditors once or twice per month to keep them informed. It will
not stop them from calling, but as time goes by, you might be able to
negotiate some terms you can live with until you get working again.
It is a GREAT idea if one is being harassed over out-of-statute debt. I have been harassed with recorded messages for years over a disputed item. These collectors buy old debt for pennies on the dollar. I don’t intend to ever pay it. When they figure this out they simply sell the debt to someone else, and three months later it starts all over again. I used to put up with it but now I send the letter after first contact. There’s no risk. If they file suit you can have it dismissed for being out-of-statute. If you continue to be contacted, you can sue them. None of this requires an attorney. (Just be sure that you don’t make any payments, and that you never acknowledge that the debt is valid. Either of these acts would re-age the account.)
Comment by KM — April 1, 2008 @ 9:31 pmKM is referring to debts that are beyond the Statute of Limitations, the
Comment by Charles — April 2, 2008 @ 8:28 amperiod in which a creditor can win a lawsuit against a debtor. In the
context of debts that are beyond the SOL period, I agree with KM that it’s
fine to use cease communication notices. The point of the original post
was to caution consumers against using such notices in general, but as
with any rule, there are exceptions. And debts beyond the legal SOL period
are one of those exceptions.