You may be able to stop the sale of your debt to a debt collection agency by simply contacting your creditor. Many creditors prefer to avoid the expense and inconvenience of dealing with collection agencies, so they may be willing to hear you out and possibly negotiate reduced payments or other terms to avoid collections.
Collections and Creditor Actions If your debt is secured, the creditor may get a court order to repossess whatever property serves as collateral (a court order may not be necessary in some cases). For unsecured debts, the creditor can cease doing business with you, notify credit reporting agencies that you've defaulted on payment, bring you to court or turn the debt over to a collection agency.
Some businesses (such as credit card companies) may have internal collection departments, while others (particularly medical creditors) may turn your account over to collections more quickly.
Contacting Your Creditor Contact your creditor as soon as you realize you won't be able to make payments. Your past financial and payment history may influence the creditor's decision. If you have a history of making payments on time and notify them in advance (rather than simply not paying), creditors may be willing to accept delayed payment.
If your creditor isn't willing to postpone your payments or temporarily accept reduced payments, or believes you won't be able to repay, it may sell your account to a debt collection agency. Debt buyers specialize in recovering debts from consumers.
After Contacting Your Creditor If your creditor is willing to negotiate, try to work out a reasonable payment plan. If you need help, consider a debt management plan or similar measure, but be careful. Some debt settlement agencies and similar groups attempt to cheat consumers who are already in financial difficulty.
If you're not sure how to solve your financial problems, consider contacting a community development credit union or similar local financial or consumer organization and ask about credit and finance counseling. You may qualify for cheap or free advice to help you negotiate with creditors and manage your money better.
Exercise your right to submit complaints against debt collectors if they deceive or harass you, use unfair practices or otherwise act inappropriately. While debt collection law doesn't forgive your debts, it does limit how companies can collect them.