Negotiating With Collectors

If the statute of limitations has not expired—and it is not about to expire—on a debt, and it has been sent to collections, you may be able to negotiate with the collection agency.

If the collection agency has stopped calling you, you’re actually in a better negotiating position, because the silent telephone means the debt collector is not optimistic about getting paid.

If you can, it’s a good idea to negotiate with the collection agency face-to-face, in person. Most are not set up to do this—and are likely to be more flexible when sitting across from you than talking on the phone.

If you have to negotiate by phone, be sure to take notes, including the date and time of the call and the full name and title of the person with whom you are speaking.

You can also conduct the entire negotiation in writing, if you prefer. If you do, be sure to keep copies of all correspondence, and send your letters certified with a return receipt.

Naturally, you will want to deal with a person who is empowered to make a settlement decision. There’s no point in pleading your case to someone, only to have to do it again for his or her supervisor.

Figure out beforehand how much you can afford to pay on this debt immediately.

The collections agent will usually turn down your first offer. So don’t start with the maximum amount you can afford to pay. Instead, start with a low-ball offer, perhaps 40 cents or 50 cents on the dollar. So if you owe $5,000, you might offer a settlement of $2,000.

When the agent turns down your first offer, ask what it will take to reach a settlement. Expect to go back and forth a few times. Collection agencies are trained to ask questions and press you for answers; if you ask them questions about what it will take to settle an account, you take back some control of the exchange.

Whatever you do, don’t agree to pay more than you can afford.

Next: Why Will a Creditor Settle?