Editorial Policy

How to get a collection agency to stop hassling you

Erica Sandberg

August 13, 2015

QHi Erica,

I told a collection agency that has been after me that I am filing bankruptcy. The guy said even if I did file, they can legally come after me and take the money. And they can keep it on my credit report. Is this correct? I don't see how that is possible. The truth for me is that I'm not positive if I'm going to do the bankruptcy, but I want him to stop calling me. Any ideas? —Stan

ADear Stan,

Great ideas? Sure, I have plenty!

Here's one directly related to your situation, however. Consider sending the collection agency a cease-and-desist letter. It will stop them from communicating with you, whether you file for bankruptcy protection or not.

According to the Fair Debt Collection Practices Act, as a consumer dealing with third-party collectors, you have the right to tell these companies that you no longer wish to be contacted. After it receives your formal notice, a representative can reach out to you once more to let you know what action they have decided to take. That could be to begin a lawsuit or to write the account off and not bother with you again.

Of course this also means that you have to be certain that you won't be sued or are willing to accept what can happen if you are sued.Ask Erica

If the debt is past the statute of limitations for collections, you're in excellent shape, as it will prevent them from suing you. (Check the law for your state.) They may also not choose this course of action if the debt is very small or if you have no assets to claim. It may not be worth their time and effort.

If you fall into these categories, feel free to pen a Dear John letter to the collection agency, explaining that this is a cease and desist notice for the account in question. Send it certified mail. Wait for a response.

Now, if they do decide to go the legal route, they will likely win. At that point you'll be slapped with a monetary judgment, which will show up on your credit report. The liability will be much larger than what it is now, too, as court fees will be added. The collection agency may be able to garnish your wages and take nonexempt property, including cash in bank accounts. Depending on the state you live in, a monetary judgment can be enforceable for a decade or longer.

Which brings us back to bankruptcy. If the collectors inform you that they'll see you in court, you can start bankruptcy proceedings, so you can get rid of the debt by including it with the others you may have. Soon after completing the paperwork and paying the filing fee, an automatic stay will go into effect. At that stage the collector won't be permitted to contact you again.

The debts you discharge in bankruptcy are gone for good, but they will remain on your consumer credit reports. The bankruptcy will be noted in the public records section for 10 years, and accounts that you included in it can show up in the trade line section, with an indication that there is no balance due.

My final great idea is to head over to a credit counseling organization that offers bankruptcy education programs. The United State Department of Justice website has compiled a list of all that are qualified to provide it. Then book an appointment for budget and debt counseling. It's free, and the adviser assigned to you will cover all of your options.

Got a question for Erica? Send her an email.