How to Negotiate With Debt Collectors (and Why You Always Should)

There is no shortage of cheater out there pretending to be debt collectors and harassing you by calling and texting you day in and day out. However, when you block these numbers, you want to be sure that they really are a scam and that you are not ignoring legitimate collection agencies (who can find you on social mediaby the way).

Calls from legitimate collection agencies mean that your original lender, e.g. B. a bank or hospital has sent your account to a collection agency to see the debts that have been paid off. However, you may be surprised by the willingness of many brokers to accept a partial payment or a proposed repayment plan. Here’s how you can negotiate your debt if a collection agency contacts you.

Don’t ignore calls from a collection agency

With all the automated calls terrorizing us these days, it’s normal to let most unknown numbers rot in your voicemail inbox. However, when dealing with a reputable debt collector, simply ignoring the call is not a good idea. However, before answering or calling back, check your rights under the Fair Debt Collection Practices Actoutlined below.

Know your rights under the Fair Debt Collection Practices Act

That Fair Debt Collection Practices Act (FDCPA) restricts what collection agencies can do when collecting certain types of debt, including auto loans, credit cards, medical loans, mortgages, and a few others. Some states have additional laws. Also, legitimate collection agencies cannot threaten or harass you. Refresh all yours rights when it comes to debt collectionso you can protect yourself from fraud or disclosure of compromising information over the phone.

Crucially, collection agencies must provide the following important details: the name of the creditor, the amount you owe, that you can request the name and address of the original loan, and the fact that you can contest the claim.

Find out about the debt

Use your rights listed above to collect all the necessary information about your debt. They want to know who you owe money to and how much you claim to owe them. If you decide to dispute a claim, the collection agency must review it. As long as you submit your dispute in writing within 30 days of receipt of the acknowledgment notice, the collection agency may not contact you again until it sends you such written acknowledgment of the debt.

Make sure you request all the information you need to develop a negotiation plan. As we touched on above, an agent may choose to accept your partial payment proposal rather than go through a long, painful collections process.

What Not to say to a debt collector

Even if you are fairly certain that you owe what the collection agency is asking for, don’t confirm yet. According to US newsOral confirmation can confirm the claim or extend the statute of limitations for collection.

If the debt is old (say, over three to six years), don’t make any payment until you’ve spoken to an attorney. You may be outside your state’s statute of limitations on the debt.

Figure out your negotiation plan

Once you’ve confirmed that the debt is legitimate, it’s time to negotiate a payment plan that works for you. This conversation with a collection agency could be more fruitful than any initial negotiation you attempted with the original creditor. That Consumer Financial Protection Agency (CFPB) outlines two main avenues for negotiating your debt:

partial refund. Although the debt collector may ask for the full amount owed, in some cases they are willing to accept a lesser amount. State your financial situation and start your negotiations low. That CFPB suggests starting by offering cents for every dollar you owe, about 20 to 25 cents, then 50 cents for every dollar, then 75 cents.

A payment plan. Review your monthly budget and debt priorities. Falling behind on other bills to prioritize that debt could lead to bigger problems down the road. If the original lender’s payment terms were too difficult for your financial situation, you may be able to negotiate a lower monthly amount with the collector. Determine how much money you can reasonably devote to a recurring debt payment.

Keep a record of everything

If you agree on a repayment or winding-up schedule, get everything in writing. Get clear documentation that the debt is accepted at a lower rate and reported as “paid in full” or “paid as agreed”. Otherwise, the collection agency may resort to verbal promises to cease collection efforts or attempt to renegotiate the amount owed later. Do not make any payment until you have a written record of the agreement.

Then, after your debt is settled, you will receive written confirmation that you have settled your debt. The last thing you want is for a debt you’ve already paid to show up at another agency to collect.

The final result

It is important that you know your rights to review the debt first and then contest it to the best of your ability. You may be surprised at a collection agency’s willingness to negotiate your debt down to a partial repayment or a more manageable repayment schedule.

Two final reminders: be wary of third-party companies that claim to pay off your debt for you and try to charge you for it. This could be another scam to add to your plate. Second, this fact may make you skeptical about calls from collection agencies in the first place. This does not mean that you should pay the original creditor directly. US News declares that at the time the collection agent has contacted you, they are responsible for the debt and it is in your best interests to deal with them directly.

If you are being harassed by a collector, you can file a complaint with the CFPB on-line or by calling 855-411-2372 and the Federal Trade Commission on-line or by calling 877-382-4357. You can also report them your state’s Attorney General.