How to Negotiate With a Debt Collection Agency

Did you know that about 71 million American adults have a debt in collections?

Being in debt can have a serious impact on your life and your mental health. It’s incredibly stressful to owe more money than you have and to be constantly contacted by a debt collection agency.

Before you start making payments on a debt you’ve been contacted about, there’s a number of things you’ll want to know.

Let’s take a look at how to negotiate with a debt collection agency for the best outcome in regard to your financial life.

Understand the Basics of Debt Collection

People these days are responsible for so many different bills that even the most financially responsible consumer can find themselves with a debt in collections. However, debt collectors also have been known to fabricate debts.

It can be tempting to ignore debt collectors if they have been contacting you. However, it is usually better for your credit in the long run to take care of the accounts. It can also help to take a lot of weight off your shoulders because you will stop being hounded by calls and eliminate the risk of being sued.

One of the basic rules of negotiation is that you want to understand as much about the other party as possible. This is no different when it comes to debt collectors.

All debt collectors have the same goal. They want to make as much money as they possibly can. They can do this by earning profit on debts that they bought for cheap or they can add fees onto the debt as state law allows.

Debt collectors aren’t able to seize property or take money from your bank account unless a court judgment gives them the permission to garnish your wages.

To learn more about debt collectors check out this debt collection agency.

Understand Your Rights

Debt collectors can easily take advantage of you if you don’t get to know your rights. Some things that you will want to know include:

  • Debt collectors are only allowed to call you between the hours of 8 am and 9 pm
  • Debt collectors can’t threaten to take actions they don’t intend to follow through with or that’s illegal
  • They can’t use profane language or harass you
  • The only reason debt collectors can contact your family, friends, or employer is to ask for your contact information

You can stop the letters and phone calls from debt collectors by asking them to stop contacting you. However, this won’t remove the collection from your credit unless it’s beyond the reporting time limit or if it’s inaccurate.

Verify That the Debt Is Really Yours

It is not unheard of for debt collectors to try and collect debts that have already been paid or that are entirely bogus. It’s good to be skeptical when you’re contacted by debt collection agencies.

Collectors have to send you a debt validation notice within five days of first contact. You then have the next thirty days to request that the collector send you proof of the debt in writing. They are no longer allowed to keep trying to collect from you until they have shown this proof.

Once they have verified that the debt is yours, the negotiations can proceed. If they don’t send proof, you can dispute the debt with the credit bureaus and send them a cease and desist letter.

Find Your Point of Leverage

You’ll want to learn about the statute of limitations and the credit reporting time limit. The latter has to do with the period of time when the debt is enforceable legally. The former has to do when the debt can show up on your credit report.

It’s important to know that making a partial payment or admitting to the debt can restart the statute of limitations. The rules about this type of thing vary by the type of debt and by state.

As a basic rule, debt collectors are more likely to accept less than full payment the older the debt is.

Determine How Much You Can Pay

Depending on your situation, the debt collector might accept less than the full payment amount. For example, you might offer to pay $4,000 on a $6,000 debt in a lump sum. You can then ask that the debt collector cancel the remaining $2,000 by honoring your payment as full satisfaction of the debt.

It’s essential that you can actually afford the amount of money you’ve agreed to. You usually only have a small window of time to make the payment.

Understand the Impact of Your Payment

If the debt is still within the credit reporting time limit, your payment will be reported to the credit bureaus. In general, payment is better than non-payment, and paying in full is better than settling when it comes to your credit report.

Be Prepared to Negotiate

It’s best to first offer an amount that is lower than what you are really able to pay. There is a good chance they will counter offer leaving you the chance to make another.

Keep Your Emotions in Check

It’s important to be careful of what you say to debt collectors. Any information they have they will use against you. Write down the names of everyone you speak with as well as notes about each conversation.

Get It In Writing

Lastly, get the agreement in writing when it has been decided upon. It’s essential that you wait until you have a written agreement before making a payment.

Has a Debt Collection Agency Been Calling You?

Having a debt collector contacting you can be incredibly stressful, but it’s best not to ignore it. Using these tips for negotiating the debt you can get yourself back on the right track.

Did you find this article about negotiating with a debt collection agency helpful? If so, be sure to check out the rest of our blog!

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