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.
I’ve previously been sued by an Original Creditor, Midland Funding LLC on behalf on Chase Bank USA N.A., claiming a debt was owed by me. It took several court appearances and filings with the clerk but the case was ultimately dismissed without prejudice because they could not provide the Instrument of creation, or proof of ownership of said debt.
The alleged debt is now beyond the Statute of Limitations. I have just received another notice from a third party, Convergent Outsourcing, Inc. attempting to collect said debt.
The back of the correspondence clearly states,
“Unless you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume the debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.”
It also states, “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency”.
My concern is if I acknowledge their claim or dispute the validity of the debt will that “reset the clock” on the Statute of Limitations allowing them obtain verification or a copy of a judgement thereby allowing them to reopen the alledged case against me?
I would like to send them a Cease and Desist letter via Certified mail but I’m not sure it will do any good.
Thank you.
Edward, the paragraph of text you quoted is required language for third-party debt collection agencies. You won’t reset the SOL clock unless you resume payment on this account. Nor will disputing the validity prompt a reset of the SOL period. Since your case was dismissed, there is no judgment for them to obtain and forward anyway. Feel free to send a cease communication notice for this situation — it’s ok to do this with debt that has expired per the SOL for your state.
Charles,
Legal jargon can be quite confusing and often seems as if it’s meant to confuse those that are unfamiliar.
Thank you for clearing that up.
If you’re paying less than the minimum balance on an account, can you still be sued, taking into account you’re still paying?
Payment under the minimum required amount does not guarantee against legal action by a creditor. The problem with this approach is that underpayment does not satisfy that month’s billing cycle. Therefore the account still rolls forward and eventually will reach charge-off. From there assignment to a law firm is possible, although generally speaking, debtors willing to pay something per month have lower risk than those who entirely ignore their creditors.