How to Negotiate with a Debt Collector: To many people, debt is a normal part of life. Many people have mortgages, credit card bills, student loans, and more.
Although it is believed that some people typically pay those bills, sometimes they do not. Please know that, debts that continue to go unpaid move to collections, landing you a negative mark on your credit scores and calls from debt collectors.
When this happens, you are often confronted with demands for payment in full. Unfortunately, meeting those demands is not always possible. Thus there is need to negotiate as well as know how to negotiate with a debt collector.
Tips on How to Negotiate with a Debt Collector
Knowing how to negotiate with debt collectors will help you work out a payment solution. It can also help you take care of the debt collection account for good.
To negotiate with a debt collector, take note of the following;
1. Verify that It’s Your Debt
One of the tips on how to negotiate with a debt collector is to make sure you are talking to a legitimate debt collector about a legitimate debt. Investigate the credibility of the caller by asking for his or her name, company, phone number and business address.
If your state licenses debt collectors, please check to see whether the company is listed. If your state does not, search for registration with a nearby state or head to the Nationwide Multi-state Licensing System database to search for the organization.
You also have the right to ask the collector to verify the debt. You have 30 days after receiving the first written notice to send a verification letter asking for additional information about the debt.
2. Understand Your Rights
As a borrower, another tip on how to negotiate with a debt collector is to know your right. The Fair Debt Collection Practices Act (FDCPA) prohibits collectors from harassing or deceiving you.
Please note that a debt collector cannot harass you or use profane language on you. The collector also cannot lie to you. Also, he or she cannot threaten to arrest or deport you.
When talking to a debt collector, it is important you take notes and record the time, date and with whom you spoke with.
3. Consider the Kind of Debt You Owe
Also, another tip on how to negotiate with a debt collector is to consider the type of debt you owe. This is when it comes to scoring better repayment terms or a lower monthly payment,
Your options will vary depending on whether you owe medical debt, student loan debt, credit card debt or another type of consumer debt.
Similarly, if you owe federal student loans, you may be able to work with your student loan servicer to defer payments or get on an income-based repayment plan.
4. Offer a Lump Sum
Some debt collectors will agree to negotiate with you to score at least a partial repayment instead of nothing. You may be able to negotiate an alternate repayment plan or repay a lump sum, which can be a more tempting offer.
If you are offering a lump sum or any alternative repayment arrangements, make sure you can meet those new repayment parameters. Nothing will be gained if you negotiate a new repayment schedule only to default on the revised agreement.
5. Mention Bankruptcy
If you have unsecured debt, mention that you are considering filing for bankruptcy if the need arises. It may give the collector extra incentive to negotiate. This is another important tip on how to negotiate with a debt collector.
Please do not use bankruptcy as a threat, but mention it if it is truly a viable option appropriate for your situation.
6. Speak Calmly and Logically
Debt collections calls are often designed to catch you off guard and create worry and fear. Enter the conversation as calmly and knowledgeably as possible.
Enter with an understanding of your rights as a debtor and what constitutes illegal behavior from the collector.
Ask for verification and sniff out any fraudsters as you determine whether the debt is yours and what your strategy will be for repayment.
7. Negotiate How It Will Be Reported to Credit Bureaus
If you do agree to settle the debt, negotiate how the creditor will report the debt to the credit-reporting bureaus.
Ask them to remove negative information and report the debt as paid in full, even if you are paying a lower amount than owed.
Do not rely on a verbal promise. Instead, ask the debt collector to include this plan in writing when you’ve finalized your repayment agreement.
8. Understand How Debt Collectors Work
Occasionally, debt collectors fabricate bonus debts and attempt to scare consumers into paying them.
No matter how much you may want to ignore the collection, taking care of collection accounts is usually better for you and your credit score in the long run. Once you pay, you will stop the collection calls and letters for good.
Collectors only make money when consumers pay the debt. They cannot seize property or take money from consumer bank accounts.
9. Get Some Leverage
There are a few things that can work in your favor when you are negotiating with a debt collector. First, if the debt collector has a lower chance of winning a lawsuit against you, they may be more likely to accept a partial payment.
The statute of limitations affects is the time period that a debt is legally enforceable. Once the statute has passed, the debt collector will have a tougher time getting a court to force you to pay the debt, if you use the expired time limit as a defense in court.
10. Be Prepared for a Counteroffer
Start the negotiation by offering a payment lower than what you really want to pay. The debt collector will probably counter with an amount higher than your offer or may even insist that you pay the full amount.
The goal is to eventually get the debt collector to agree to an amount at or less than what you’ve decided you can afford to pay.
11. Stand Your Ground
Another tip on how to negotiate with a debt collector is to be aware that debt collectors have access to your credit report. They may use the information in it to push you into paying more than you have offered.
Remain in control of the conversation and stand firm in what you are willing and able to pay. Do not let a collector bully you into letting your other financial obligations slide.
12. Get the Agreement in Writing
Once you and the debt collector have arrived at a payment amount that works for both of you, get the agreement in writing.
This is particularly necessary if you have worked out a payment arrangement or settlement amount. Do not make a payment until you have a written agreement from the debt collector.
Keep a copy of the agreement and proof of the payments you make. This is in case there is ever a question about whether you satisfied the debt.
In a Nutshell
Though debt collectors can be very intimidating, it is pertinent you know what to do. Knowing the tips on how to negotiate with a debt collector is essential. From the above therefore, when dealing with a debt collector you should know what to do.