Ask Jack About Debt

Original Creditor - Debt of Under $1,000

Is your debt of UNDER $1,000 to an original creditor

If you are being "dunned" (chased) by an original creditor (like a store or a credit card) for a debt of less than $1,000, you have some choices. If you feel you did not incur the debt - or if the debt is for an incorrect amount -- then read about wrong identity. Otherwise, read on.

Because the debt is small it is unlikely they will pursue it in court. They may threaten to do so. They may threaten to attach wages. But these threats are usually hollow, (and if made a by a collection agency, could be illegal). See details of "Fair Debt Collection Practices Act"

These are possible options for a debt to an original creditor, for less than $1,000:

  • If you feel you cannot pay the debt and you are willing to have your credit rating damaged to some extent by having the fact that you did not pay become part of your record, then you could simply refuse to pay it.
  • If you are not willing to damage your credit rating, then we suggest you try to make a deal with the creditor. Go to the "original creditor debt over $1,000" page to see how to do that.
  • If you decide not to pay, here is what will happen. The creditor will dun (chase) you for some time trying to collect. Your state may have laws that limit how often they can contact you and how. You might want to check those laws and report any violations to the state Attorney General.
    1. When they have decided you are a "dead beat" the creditor will place a negative report on your file at one or more of the three credit reporting agencies.
    2. They will then turn your debt over to a collection agency, which is probably working on a percentage of everything they collect. The collection agency will start the cycle all over again. And they are much more likely to ignore the laws than the creditor is. However collection agencies are federally regulated and you can stop them from contacting you. For details on what collection agencies may do, see "Fair Debt Collection Practices Act"

Instead send them the letter below. You can copy it here and paste it into your word processor to fill in the necessary details. Keep a copy and send it certified mail, return receipt requested. This will cost a few dollars but in most cases it will work. And if it does not, the collection agency is very likely to be in violation of federal law.


DATE: [[date]]

TO: [[ name and address of collection agency ]]

FROM: [[ your name and address ]]

RE ACCOUNT NUMBER: [[ account number if relevant. It should be on any letter you have received from collection agency ]]

BALANCE DUE: [[ amount ]]

You are herby notified, under provisions of the Fair Debt Collection Practices Act [15 USC 1692c], that you must cease and desist all communications with me after being notified in writing that I no longer wish to communicate with you. Therefore I demand that you stop calling me at home, at work, on my cell phone or any other location.

In accordance with the federal FDCPA, now that you have received this letter, you may contact me only to inform me that you are terminating further collection efforts; invoking specified remedies which are ordinarily invoked by you or your company; or you intend to invoke a specified remedy.

1. You and your organization must CEASE AND DESIST all attempts to collect the above debt. Failure to comply with this law will result in my immediate filing of a complaint with the Federal Trade Commission and the Attorney General of [[insert name of your state]].

2. Let this letter also serve as your warning that I may utilize telephone recording devices in order to document any conversations that we may have in the future.

3. Furthermore, if any negative information is placed on my credit bureau reports by your agency after receipt of this notice, I intend to pursue any and all remedies available to me by law by means of civil suits against you and your organization, both personally and corporately.

Since is it my policy neither to recognize nor deal with collection agencies, I will discuss this account only with the original creditor.


[[ your name and signature]]

This should stop all contact with the collection agency. The only things they can legally do are tell you that they will no longer contact you or call you into court. Click here for Fair Debt Collections Practices Act info. With small debts they will not bother. I have seen a couple of cases where they set up a court date to put some pressure on the debtor but they never bothered to show up, so the case was dismissed.

In all likelihood they will go away. But there is one more thing that may happen. Five years or more from now they may resurrect the debt and sell it to another collection agency for pennies on the dollar. These "vulture collectors" as I call them pick over the deadbeat list and if they find a few people willing to send them a check they win.

If this happens to you, read the instructions on collection agencies - debt under $1,000.

Some things you should NEVER do when dealing with collection agencies

  1. Most people are too polite when it comes to debt collection. They want to do what's right. They do not want to hang up in anyone's ear. But my advice is never to talk to a collection agency or anyone who works for a collection agency. If you want to make a deal, deal with the original creditor.
  2. If you DO make the mistake of talking to them NEVER, EVER give them your checking account number. Even if they tell you they will take only one payment, they are very likely to keep drawing out money until their debt is paid. This can wreak havoc with your finances. Your checks will start bouncing.
  3. Never make a payment without a deal, IN WRITING. They give you the impression that if you just send them $50 or $100 now, they will go away. Nothing could be further from the truth. Once they know that a phone call can get them cash, they will start calling more often. Never send money UNLESS YOU HAVE NEGOTIATED A COMPLETE DEAL WITH THE ORIGINAL CREDITOR OR THE COLLECTION AGENCY AND HAVE THE DEAL IN WRITING. If it is not in writing it is NOT a deal.

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