How to Negotiate With Debt Collectors
It's stressful when you have past due bills and not enough money to pay them. It's a challenging situation, especially when you don't think there is a solution. There is something you can do today, and that is learning how to negotiate with debt collectors.
There's one catch—you must understand how to play by the rules. A question you should know the answer to is, "Will debt collectors settle for less?" We'll explain, so you'll be armed with knowledge. Follow our tips, and you'll know how to deal with debt collectors and win.
Are you afraid you're not up to taking on this battle? Don't fear, there is an easier solution. Let DoNotPay negotiate with debt collectors on your behalf.
Verify the Debt Before Negotiating
Collecting debts is a business and one that's not always reputable. Our debts are often bought and sold to different collection agencies. Verify that the debt is accurate before you negotiate with a debt collector.
Do this by sending a Debt Validation Letter and DoNotPay can do this for you or explain how to do it yourself. This is a request for validation of the debt. Every consumer has the right to do this under the Fair Debt Collection Practices Act (FDCPA).
Validating a debt is an essential step because you may not recognize the debt, or you may have forgotten that you paid it. Even if you know the debt is accurate, sending this letter ensures you will be dealing with the correct debt collection agency.
If the Debt Is a Mistake
If you find out that a debt collector says you owe money and the debt is either not yours, or you already paid it, here's what to do:
- Contact the debt collector. Clearly explain that it is a mistake. Firmly tell them that you will file a report with the Fair Debt Collection Practices Act if they contact you again.
- Contact each credit bureau. Determine if the debt is on your credit report and if it is, dispute it to have it removed.
Negotiating an Agreement on a Monthly Payment With a Debt Collector
If you are negotiating for a debt settlement, it means a debt collector will accept a lower amount than your total balance. Typically, you must pay the amount agreed upon in one lump sum, not monthly installments.
It never hurts to ask if you can pay in monthly installments since the worst they can say is "no,"—but it is not likely that a debt collector will agree to this.
Settling with a debt collector offers the advantage of not having to pay the entire balance, which can be especially helpful if late fees and interest have been added up. Read on for more about the amount that you should agree to pay.
Can You Afford to Pay Your Debt in Full?
Rather than negotiate for a debt settlement, you can choose to pay off your full balance if it is affordable.
If you choose this option, monthly payments are the norm, not an exception. Make sure they are low enough to fit within your budget.
Should I Settle With a Debt Collector?
Before you decide to negotiate a settlement with a debt collector, you should understand that there are pros and cons to this solution.
Weighing the Pros & Cons of Debt Settlement
|Pros||The amount you owe may be significantly reduced, often by half.|
|It may feel like a huge relief and the fastest way to dig yourself out of a financial 'black hole.'|
|You'll be able to move beyond this debt since it will be considered resolved.|
|Cons||Creditors typically only accept a lump sum, not payments. You'll have to set aside some cash.|
|You may have to pay taxes on the amount that is forgiven.|
|The settlement will be listed on your credit report for seven years unless you can get it removed earlier. It will often lower your credit score immediately.|
Negotiating Tips: How to Get a Collector to Write Off Debt
The more familiar you are with the negotiation process, the easier it will be not to let a debt collector take advantage of you.
How much will a debt collector settle for? A better way to ask that question is this: "What percentage of the debt will collectors settle for?" This is because a debt collector is likely to propose an offer that is a certain percentage of your total debt.
Here Are the Percentages to Be Familiar With Before Negotiating
- 30% of your debt: Start by offering this amount. It's low, which leaves room to negotiate.
- 40% - 50% of your debt: This is the amount a debt collector will often accept, as experts say.
- 80%: A debt collector will often begin negotiations by asking you to pay 80% of your total debt, forgiving only 20%. According to several experts, paying any amount above 50% is too high. If you agree to this amount, you are not getting the best deal.
Also, prepare for negotiations by deciding what you want the outcome to be. Do you want to make 3 payments on a debt when being collected, for example? Wondering how to do it without talking to them? You can also consider an alternative solution, and that is by letting DoNotPay help you out. We can make the settlements much easier.
How to Negotiate With Debt Collectors on Your Own
If you're ready to take the next steps in trying to resolve this issue on your own as well as get these debt collectors to stop calling you asap, here's what to do.
- Verify the debt if you don't recognize it. Ask the collections agency for a debt validation letter. Mistakes happen, and there are numerous unethical collection agencies that you should not trust. Sometimes, either the debt isn't yours, or it has already been paid.
- Once the debt collector sends you a validation letter, make sure it shows the creditor's name. What do you do if it doesn't look legit? File a debt verification request.
- If the debt is legit and you are ready to negotiate, decide what outcome is best for your financial situation—a payment plan to pay off the total amount or a settlement for less.
- Call to negotiate, following our tips listed above. Keep in mind that all debt collectors must agree to your terms for how they can contact you. For example, you can specify that they can only call you at a certain hour of the day.
- Understand the FDCPA's ethical debt collection practices. If a debt collector violates these practices, you can report the company to the Federal Trade Commission and the Consumer Financial Protection Bureau.
- Before you end negotiations with a debt collector, be sure to ask for confirmation of your agreement—in writing. Ask for a letter stating the amount you paid. It should clearly say that the debt is resolved, and any remaining balance is not subject to further collection.
- Contact credit bureaus to ask if you can remove the settlement from your report by sending them written confirmation of the debt resolution. A settlement stays on your credit report for seven years, but you should still ask about the possibility of removing it earlier.
Challenges of Trying to Negotiate Yourself
Dealing with debt collectors can be intimidating, especially if a collection agency is known for questionable tactics. You may feel pressured to accept an agreement that is not in your best interest.
What could go wrong? If you negotiate badly and agree to pay a higher amount than you can afford, you'll be back to square one. If you break the terms of the agreement, you'll start getting calls and letters again and your account will be back in collection. You'll have to begin this process all over again.
What else can go wrong? A debt collector may not want to offer you a settlement and refuse to negotiate.
Instead, get DoNotPay on the case and we'll look into every possible way to get you the best deal, stopping debt collectors in their tracks.
How to Negotiate With Debt Collectors With the Help of DoNotPay
Sometimes you need an expert's help. Stop debt collectors quickly, no matter how long they've been calling you. We will look into every detail of your case to ensure a debt collector is following all FDCPA's rules.
We will gather all your information through a series of questions and then help determine the best actions to take.
Here's how it works:
- Search “debt collection” on DoNotPay.
- Answer a series of questions about the debt collectors, including when you were contacted and how you were contacted, so we can determine if they have violated any debt collection laws.
- Decide which course of action you want to take based on our guidance, such as filing a debt verification request, demanding for the collectors to stop contacting you, or reporting them to the CFPB.
The debt collectors will receive your request, and you're done!
DoNotPay can also help you:
- Contact a debt collector on your behalf with a demand letter
- File a complaint against a debt collector with the CFPB
DoNotPay Can Help With Even More
Take a look at the other ways we can help you solve debt and financial issues:
- Steps to Take to Increase Your Credit Limit
- How to Clean Up Your Credit Report
- Find Out If a Debt Collector Can Take Your Stimulus Check
- How to Write a Dispute Letter to a Debt Collector
- How Often Do Debt Collectors Take You To Court?
- Get Help with ERC Debt Collection
- Get Help with Medical Debt Collection
- Statute of Limitations on Debt Collection, By State
- How Long Can Debt Collectors Try to Collect?