You should not, in my opinion, try to settle the debt with the collection agency. They are not to be trusted to negotiate fairly. And they will not give you the best deal.
Send them the Cease and Desist letter below. Depending on the age or amount of the debt, that might be the end of it. (They won't pay lawyers if the amount and certainty of collection does not justify the cost.)
Once you have gotten the collection agency off your back, and you're pretty sure the debt is not old enough or small enough to go away, the best thing to do is contact the original creditor and try to negotiate a settlement. If you can pay a significant portion of the debt up front, they may be willing to cut you a deal. Make sure you get the deal in writing (email will do) and that they agree to notify the three credit reporting agencies that the debt has been settled.
BY CERTIFIED MAIL
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.
I intend to settle this debt with the original creditor.
[your name and signature]
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