How to Negotiate with Debt Collectors

negotiating with debt collectors

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Your debt is piling up, and your income doesn’t seem to be enough to cover every bill. Not only that, but your creditors have gone so far as to call a collections agency to come after you for your debt owed.

It’s a common theme these days, as more and more consumers are being faced with mounting debt that they can’t seem to climb out of. When my debt got out of control I received calls and letters from collection agencies demanding that I pay my outstanding balances right away or I’d face financial consequences. But unless I won the lottery or got a massive raise at work, I knew I wouldn’t be able to repay all that I owed within a short amount of time. But something had to change.

Then I found out that I could actually negotiate with my debt collectors. By simply having a conversation with these agencies, it’s possible to reduce your debt load. Even if the collector won’t agree to a lower payment amount, you might still be able to come up with an arrangement for you to pay off your debt in easier-to-manage installments.

The key is to understand exactly how to negotiate with your debt collectors in order to work something out that will make it a lot easier for you to repay your debt without having to go down the bankruptcy road. Rather than be demanding and invasive, consider the following tips when negotiating with your collectors to help you get rid of all that debt once and for all.

Figure Out Exactly How Much You Can Afford

The first thing you should do is calculate exactly how much you’ll be able to afford. There’s no sense in negotiating a new deal with your collectors only to find out that you still can’t afford the new number you come up with.

Go over your budget very carefully to find out how much you can realistically afford. When you do have a chat with your collectors, you’ll have a number to work towards. If you are able to agree on a new payment plan, be sure to fully understand the exact total amount that you will be responsible for paying.

Understand Your Rights

Make sure you’re completely familiar with all of your rights before you pick up the phone to speak with a debt collector. If you don’t, you could be taken advantage of by debt collectors who know more than you do and have more experience.

It’s not uncommon for debt collectors to get all high and mighty with consumers. They could very well make any number of threats, such as “You’ll be sued if you don’t pay” or “You’re going to lose your house and all of your valuable assets.” While this could be true at some point down the line, many times such threats are made to scare consumers into action.

But they can’t threaten you with legal action or with anything that they have no intention of going through with. Debt collectors are also not allowed to use foul language or harass you in the middle of the night (calls can only be made between 8AM and 9PM). Believe it or not, collectors must also stop calling you all the time if you ask them to. That said, a collection will still be on your credit report, though only if it is accurate.

Frugal living
Figuring out how much you can comfortably afford should be done before you pick up the phone to negotiate with your debt collectors.

Describe Your Situation Truthfully

Debt collectors aren’t interested in hearing your sob story about why you can’t pay your bills. All they care about is why you’re in the financial predicament that you’re in and what you are doing to help yourself get out of it. It would help if you’re trying to make a valiant effort to repay your bills rather than simply throwing in the towel.

Just make sure you’ve got a solid reason why you’re struggling to repay your balances, whether it’s because you lost your job, got sick, or were surprised with an unexpected expense that you couldn’t do anything about. Just make sure that you are direct, to-the-point, and honest about your situation. No fluff needed.

Keep Your Cool

Being underwater in debt is definitely a stressful situation, but the last thing you want to do is bring too much drama to the table when dealing with your debt collectors. Stay calm and avoid any confrontation. If you feel your blood start to boil when you’re speaking with a debt collector, end the conversation and tell them that you’ll call back. Losing your cool with a collector will do little for your case.

Try to Deal With Creditors Rather Than Debt Collectors

You don’t necessarily have to deal with a debt collection agency to settle your debt in many cases. Instead, you can speak with your creditors directly to negotiate a new deal. However, this will need to be done before a bill is sent to collections.

There’s no harm in calling your creditors and asking them to negotiate your current debt. You can ask to have the payment due dates extended, set up a payment installment plan, or ask to have the interest rate reduced, which can all help you more comfortably pay your debt before collections get their hands on it.

Get Your New Agreement in Writing

If you are able to reach an agreement with your debt collector, be sure to get it in writing. This is especially important if a new payment amount or arrangement have been established. Your first payment towards this new arrangement should only come after you receive a written agreement from the collector.

Final Thoughts

Drowning in debt sucks, and it can be a really frustrating and even scary situation if you’ve got debt collection agencies on your tail. But you don’t have to wave your white flag and give up just yet. There’s no reason why you can’t take a little time to get in touch with your debt collectors and attempt to negotiate a deal. If you go into the conversation armed with information and confident in your position, you just might be able to strike a new deal that you can actually afford.

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