How to Negotiate with Debt Collectors

Receiving calls or letters from debt collectors can be stressful, and although a solution can be as simple as writing a check, in many otherinstances where your cash available to pay debt isn’t enough, you may want to stablish a well-thought negotiation with the debt collector.

Debtors may choose to negotiate better terms and reduce the amount owed.  But it is important to be well informed and act according to needs and possibilities, because a fulfilled settlement might look different on your credit report than a paid in full note.

Here’s a list of things you should keep in mind when negotiating with a debt collectors:

Verify that it’s your debt.

Ask for a validation letter. If the collection agency can’t supply this information, you should be alerted something is not right.

Understand your rights.

The Fair Debt Collection Practices Act, or FDCPA, prohibits collectors from harassing or deceiving, so if they are pushy, look into the agency and verify it’s legit.

Verify that it’s your debt.

Your repayment options or financial assistance may vary depending on type of debt you owe.

Offer a lump-sum.

Some debt collectors will agree to negotiate a debt settlement accepting a lump-sum payment in exchange for your debt being forgiven and score at least a partial repayment to the credit bureaus.

Be mindful of the statute of limitations.

If a collector is pursuing an old debt, it may have passed the time frame during which a creditor can sue you to collect.

Get the settlement agreement in writing.

If you’ve negotiated any new debt repayment terms, credit-reporting perks or additional changes, get the settlement agreement sent to you in writing.

Be wise and logical.

Engage with the debt collector as calmly as possible, prepare yourself and make a plan, understand your rights and be aware of your cash availability for payments.