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Tips for Negotiating with Collection Agencies

8 Handy Tips and Tricks for Negotiating With Collection Agencies

Negotiating your debts with your creditor or a collection agency for that matter, is never an easy task. Consider the following tips and tricks that would enable you to talk it through and lower the amount that you have to pay to your creditor.
WealthHow Staff
Last Updated: Mar 28, 2018
Many have fallen in debts and become liable to pay huge amounts to their creditors. They find it really difficult to deal with the lenders or collecting agencies. One of the best possible ways to get rid of your debt is to ask the creditors to negotiate the amount that is to be paid. In this manner, you can ask the creditor to allow you to pay a certain amount smaller than that which is due.

Creditors and Collection Agencies

If you owe a particular amount to a creditor, he will obviously pursue you and keep asking you to repay the same. He would remind you periodically via emails or phone calls. However, if he thinks that the debt repayment from you is not possible, he may hire a collection agency to do the job. A collection agency is a third party, who, on behalf of the lender, tries to collect the outstanding amount from the debtors. If the creditor or debt collector cannot get the outstanding amount repaid from the debtor, he may file a lawsuit in the court of law.

How to Negotiate With Collection Agencies
  • First, you need to get all the information about the Statute of Limitations (SOL) on your debts. SOL on a debt pertains to a certain time being allotted legally by the court for debt recovery. Once the maximum allotted time period is over, the creditor is no longer allowed to try for debt collection, after which that particular debt is non-collectible.
  • To start, you need to get in touch with your state's office and authorities and obtain the conditions of SOL on debts, since the SOL specifications may vary from state to state.
  • If you find out that there is still time for the SOL period to turn invalid, you can inform the creditor about the same. Here, arises a chance for you having to negotiate the total amount that you owe to the lender.
  • At this point in time, the collection agency or the creditor is most likely to agree with the negotiation; as for the lender, something is always better than nothing. If he does not agree on the negotiation, inform him that you may opt for filing bankruptcy. Ensure that you carry out all debt negotiation transactions and communication in writing.
  • For debt reduction, it is better that you do not take the initiative to ask at what rate he can waive off the total amount. As receiving the amount is his need, he is more likely to ask you for a negotiation amount, after which you can put forth your amount. Make sure you quote far lesser than you actually intend to pay the lender.
  • Do not be in a haste for getting the amount reduced. The more time you take for the negotiations, the lesser the amount the creditor will quote, which will be beneficial for you.
  • Try your best to get the amount reduced as much as possible. In some cases, it is also possible to get the amount reduced to approximately 70% on the amount due. Along with debt reduction, you also need to consider getting the records on the credit report right.
  • Ask the lender if he can remove negative records or statements from your credit report. Typically, the lender will agree for removing a bad remark from the credit report if you pay him a portion of the due amount in lump sum. A good and clear credit report is very important to deal in financial transactions in the future.
These were some general tips for negotiating with collection agencies. Make sure that you keep a record of all the transactions, agreements, and dealings, in writing.