Negotiating Debts With Collection Agencies

Negotiating debts with collection agencies doesn't have to be confusing or frustrating when consumers understand they have the negotiating power. Yes, debt collections agencies are relentless and sometimes ruthless. They send letters or constantly harass people at home or at work. However, debt collection agencies are not the original debtor. Companies often use debt collection agencies to assist in obtaining overdue accounts. Thus, debt collectors typically settle for less money—sometimes for pennies on the dollar—than demanding the original amount because they are paid on commission. So if you know you owe the debt and want to negotiate a settlement remember important facts can be the difference between paying a small or enormous amount of money.

Don't Cave

People may hate screening their calls to avoid debt collection agencies' recorded messages to please call them back. However, it's better to take a step back and refrain from agreeing to any amount of money to stop the constant calls. Negotiating debts with collection agencies takes the right frame of mind to bargain for a favorable settlement. Thus, speak with them at time that's convenient for you. Also, people must avoid letting debt collection agencies know their intentions such as trying to clean up their credit, buy a home or car. The agencies may use the information against you to get the upper hand during negotiations. For instance, they may not negotiate a lower settlement if they know you are probably willing to pay the original amount of the debt. During conversations with the debt collectors, people shouldn't mention they have enough money to pay the balance original balance in full. Although it's tempting, don't argue with debt collectors. It potentially places negotiation at a standstill.

Avoid Payment Plans

Of course, the desire to settle the debt is larger than the amount of money in the bank. However, people should avoid negotiating payment plans with debt collection agencies. Even with the best intentions of paying, miss payments do occur. Debt collectors may accuse people of defaulting on the payment plan and change the negotiated financing agreement which increases the total amount due, according to Credit Builders Alliance. Therefore, agree to lump sum payments only—even if that means you have to save up the money before negotiating.

Request a Confirmation Letter

Staff turnover is high at collection agencies. So, it's best to request a written agreement before paying the debt.

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