Why Cease Communications Hurt Debt Negotiation

Many debt negotiation companies tout their ability to stop creditors from calling during the course of their program. While steps can be taken to help reduce the calls that clients receive during the negotiation process, companies that promise to completely stop creditor calls are either deceptive or using obsolete techniques and are, therefore, best to be avoided.

One method that some companies employ to prevent collection calls involves sending “Cease & Desist” letters to each of your creditors upon enrollment in their debt negotiation program. According to the Fair Debt Collection Practices Act (FDCPA), debt collection agencies are specifically prohibited from contacting a debtor if he or she sent written notification to the collector to cease communications. Under this provision of the FDCPA, after receiving a “Cease & Desist” letter, collectors can only contact a debtor to notify him or her that they intend to terminate their collection efforts, or that they intend to invoke a certain remedy. There are two important things to note about this provision:

1) It pertains only to collection agencies, not the original creditor, unless you live in a state that adopted the FDCPA specifically applying to the original creditor. In other words, if a credit card company receives a cease communication letter and you do not live in one of the handful of states that adopted the FDCPA for original creditors, they are not obligated to honor your request to stop calling. Therefore, promoting debt negotiation as a way to stop creditor calls is in fact misleading, unless your debt is with a third-party collector.

2) The FDCPA allows collectors to notify debtors that they intend to invoke a certain remedy. So the implication is this: although a collection agency may have received a “Cease and Desist” and honored it, that does not mean they do not want payment any longer. Given this fact, the only logical action the creditor can take is to sell the debt to a third party in hopes of recovering something instead of nothing or pursue legal action to collect the full balance. Normally the creditor has another logical choice available to them---assign the debt to another collection agency and hope they can do a better job of contacting the debtor to get payment. Why is this no longer a logical option when a debtor has shown they are willing to send a cease communication letter? Because what is to stop the consumer to send another cease communication letter to the next collection agency who is assigned the account? Sure, the creditor can still sell the account to a debt buyer and legal action may still be avoided, but why increase the likelihood of a lawsuit by eliminating another reasonable outlet for the creditor (assigning the account to anther third party collection agency) when it is unnecessary and other steps can be taken to minimize the calls (i.e. simply referring them to your debt negotiation company every time they call until they get the point).

“Cease & Desist” letters are best used in cases of extreme creditor harassment. Like many things, at one time cease communication letters were a very useful, but collectors have adapted and found solutions to combat it. Far too often their solution is pursuing legal action.