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From the Experts at

Ten Tips For Negotiating With Creditors

October 3, 2013 by Gerri Detweiler

Negotiating with Creditors

If you are falling behind on your bills, your phone is probably ringing off the hook with calls from creditors and/or debt collectors. While the last thing you probably want to do is talk with them, you may find that they are willing to work with you. Here are ten tips for negotiating with creditors and collection agencies:

1. Stick to Your Story

The person on the other end doesn't want to hear all the details about why you're not able to pay your bills. But they do need to know if you are in a hardship situation and what you are trying to do to get back on track. It's helpful to come up with a few sentences that you can use consistently when you talk with creditors. For example,

"I was very ill, out of work for two months, and now I am trying to get caught up."

"My wife was laid off, and I've taken a significant cut in pay. She's looking for a job so we can catch up, but we don't have any money to pay right now."

"My interest rates have doubled and I can no longer keep up. I am meeting with a bankruptcy attorney to see whether I should file."

Be truthful! If you tell everyone a different story, especially one that's not true, it's bound to backfire.

2. Avoid Drama

Try to stay calm, no matter what the person on the other end of the line says. You'll get nowhere if you lose your temper. If you find yourself losing your cool, just tell the collector you'll have to talk with them later and hang up. If you need to talk with that representative again, tell them you'd like to record the conversation. That usually keeps them on their best behavior.

3. Ask Questions

If a collector says you'll be sued, or that you'll lose property if you don't pay, just calmly ask for specifics: "When can I expect to be notified of this lawsuit?" Or "When will you take the money from my bank account?" Some of these threats may be illegal, and the more information you have, the better.

4. Take Notes

Have a pen and paper handy so you can take written notes whenever you talk with a collector. Write down the name of the person you talked to, when you talked, and what was discussed. Not only can this help you take the emotion out of the situation, but you'll also have a record if the creditor or collector broke the law in their attempts to collect.

5. Read (and Save) Your Mail

Don't throw away mail from your creditors or stuff it in a drawer. Open it, read it, and save it in a file.

6. Know What You Can Afford

Go over your income and expenses with a fine-tooth comb, figure out what you can afford, and only agree to pay a realistic amount. Generally, you can negotiate the best settlement on a debt if you can come up with a lump sum amount to resolve the debt. If you agree to a payment plan, you will likely pay more over time. If you do agree to a payment plan, make sure you understand the total amount you will pay.

7. Deal with Creditors, Not Collectors

If possible, try to work out an agreement with your creditors before a bill is sent to collections. While late payments affect your credit reports and scores, collection accounts can result in even greater damage. By the way, it's a myth that as long as you are paying something toward a debt (even $5 or $10), it can't be turned over to a collection agency. Once a debt has been sent to collections, you may have no choice but to deal with the collector.

8. Get it in Writing

When you do come up with a payment arrangement, or a settlement agreement, get it in writing before you pay a penny. Otherwise, the terms can change and it will be your word against theirs. We've heard of consumers being hounded for balances they thought were resolved years before.

9. Get Help

If you are having trouble coming up with a repayment plan that works, find out whether a credit counseling agency can help you work something out with your creditors. If it is unlikely you'll be able to pay back your debts, or if debt collectors are hounding you, request a free consultation with a bankruptcy attorney. Even if you decide not to file, the attorney can tell you what a creditor can and cannot do to collect.

10. Put the Past Behind You

Catching up on a delinquent account, or paying off a collection account, won't improve your credit unless you can get the creditor to agree to remove the late payments. But even if that's not possible, you can still begin to build better credit as soon as your debts are resolved.

Find Out Where You Stand

You can check your credit score each month using's free Credit Report Card. This completely free tool will break down your credit score into sections and give you a grade for each. You'll see, for example, how your payment history, debt and other factors affect your score, and you'll get recommendations for steps you may want to consider to address problems. In addition, you'll also find credit offers from lenders who may be willing to offer you credit. Checking your own credit reports and scores does not affect your credit score in any way.

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Meet Our Experts

Gerri Detweiler Gerri Detweiler is's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of

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