9 Tips to Successfully Negotiate with Debt Collectors

If you have a collection account that you want to take care of, but can’t afford to pay it in full, you may be able to negotiate a cheaper payment with the debtor. Even if you can’t get the collector to agree to accept a lower payout, you may be able to draw up an agreement to pay the debt in installments. Knowing how to negotiate with debt collectors will help you to process a payment solution that works in your favor.
1. Understanding how debt collectors work
Debt collections can also happen to more financially responsible consumers. A bill may slip your mind, you may have a dispute with the creditor of what you really owe or the billing statements may get lost in the mail before you know that the debt exists.
No matter how much you would ignore the collection, taking care of the collection accounts is usually better for you in the long run. Once you pay, it will interrupt your collection calls and letters for good, improve your credit history and eliminate the risk of being sued for debt.
As with any negotiation, knowing how much you can on the other party puts you in a better position to get what you want from the deal. The goal of the debt collector is to get as much money as possible from the debt collection and they do it in two ways. Debt collectors can add tax on the debt as permitted by state law.
Or, buyers of junk debt earn profits on the debts they have bought for only penny on the dollar. Collectors only make money when consumers pay the debt. They cannot seize property or take money from consumer bank accounts unless they sue and get a court ruling and permission to garnish consumer wages.
2. Know Your Rights
Before you talk to a debt collector, familiarize yourself with your rights. Otherwise, debt collectors who are smarter and savvy than you can easily take advantage of you.
Here are some things to know:

• Debt collectors can only call between 8:00 and 9pm.
  They can’t let you harass or use profane language when you talk to yourself.
• They cannot threaten to take illegal actions or that they do not intend to pursue with.
• Debt collectors can contact their employer, family members and friends to contact information about you.

Debt collectors may attempt to collect from you by calling, sending letters and listing a debt on your credit report until the debt falls within the time limit of credit reporting. You can stop calls and letters asking the collector to stop contacting you. However, it is generally not possible to remove a collection from your credit report, unless it is inaccurate or beyond the reporting time limit.
3. Make sure it is the debt
Don’t take it for granted that a collector you contact is pursuing a legitimate debt. Debt collectors have been known to pursue false debts or even attempt to collect on debts already paid.
Approves all debt collections with a healthy dose of skepticism.
You have the right to ask the debtor to prove that the debt is yours and that they are allowed to collect. This process is known as debt validation. You have 30 days from initial contact with the debtor to request, in writing, that the debtor will send you the proof of the debt. Once the collector receives your request for debt validation, it cannot continue to collect from you until they have sent the required proof.
Once the collector sends the proof and you are satisfied with the debt is legitimate, you can proceed with the rest of the negotiations. If not, send the collector a letter of termination and ending by asking to stop contacting you and contest the debt with the credit bureaus.
4. Get Some Leverage
There are some things that can work in your favor when you are negotiating with a debt collector.
First, if the collector has a lesser chance of winning a lawsuit against you, they may
The statute of limitation affects is the time when a debt is legally enforceable. Once the statute has passed, the debt collector will have a harder time getting a court to force you to pay the debt if you use the expired term as a defense in court. Just be sure not to accidentally restart the statute of limitation by admitting to the debt or making a partial payment. The statute of limitation varies depending on the state and type of debt and starts with your last activity on the account.
Another time period that can work on your behalf is the time limit of credit reporting. This period of time affects whether a debt can be listed on your credit report. If a debt has declined in your credit report, or is expected to fail soon, there is less incentive to pay it – it has no effect on your credit. However, you may feel motivated to pay the debt due to a moral obligation, to prevent debt collectors from contacting you on debt for good or to eliminate the risk of being sued. Using a credit expiration time limit as a betting tool can encourage the debt collector to work with your budget.
In General, the more debt the debt is, the more likely you can convince the debtor to accept less than the full payment. Search for and verify both the statute of limitations and the time limit of credit reporting before you start negotiating with the debt collector.
5. Figure of what you can pay
Paying your debt collection is important, especially if it prevents you from improving your credit or getting approval for other credit cards and loans. Before you offer a payment to the debt collector, consider the other financial obligations. Take a look at your budget-your earnings and expenses-to understand what you can pay towards the debt. Consider whether you can pay all in one lump sum or break it in a few payments. Keep in mind that debt collectors want to collect as quickly as possible, so the spread of payments for more than a couple of months will not be an option.
You could, for example, offer to pay a lump sum of $3 000 for a debt of $5 000. You will ask that the debtor receives his payment as full debt satisfaction, which means that the collector cancels the remaining $2 000. Or, you could offer four monthly payments of $250, to fully pay the debt. Make sure you can pay what you’ve offered. Once the debtor accepts, you can only have a small window to make the payment.
6. Knowing how your payment will interest you
Know what your offer means to you. Your payment will be reported to credit agencies if the debt still remains within the time limit of credit submission – which is seven years for most debts. Paying in full seems generally better than solving your debt, but a payment seems better than not paying.
Any payment on the debt will reopen the statute of debt limitation. It is important that you have an agreement on what will satisfy the debt and eliminate the risk of being sued in the future.
Debt settlement can have tax implications. If more than $600 of your debt is canceled, the collector must report the canceled amount to the IRS. You will be sent a 1099-C form to include the canceled debt as income on your next tax return.
7. Be prepared for a counterweight
Start trading by offering a somewhat inferior payment to what you really want to pay. The debt collector will likely contract with an amount higher than your bid or even insist on paying the full amount. The goal is finally to get the debt collector to accept an amount equal to or less than what you have decided you can pay.
8. Stand Your Ground
Debt collectors use all the information they can get about you to collect the debt on your part-so pay attention to what you divulge in your conversations. Stay in control of your emotions, no matter what and just talk about your offer. Avoid discussing your income or other financial obligations unless you are sure that giving this information will benefit the negotiations.
Keep in mind that debt collectors have access to your credit report and can use the information in it-like new loans or punctual payments on your other accounts-to push you to pay more than what you have offered. Stay in control of the conversation and stand firm in what you are willing and able to pay. Do not let a collector have a habit of letting other financial obligations slip.
You may have to go with several debt collectors before you come to an agreement. Don’t be surprised if you’ll end up talking to several people at the collection agency. Keep the notes of all your communications with debt collectors, noticing who you talked to and details about the conversation.
9. Get the Writing agreement
Once you and the debt collector have arrived at a payment amount that works for both, get the agreement in writing. This is especially necessary if you have processed an amount or a payment amount. Do not make a payment until a written agreement of the debtor is provided for.
Keep a copy of the agreement and proof of payments you make just in case there is ever a question if you have satisfied the debt.
For some, it’s easier to write a check for the entire amount and do it with the debt completely. But, if you’re looking to save money on debt or just can’t afford to pay it in full, negotiating a smaller payment is worth it. You can do it yourself, even if you have to write a letter to start negotiations. It is less expensive to hire a debt reduction firm to negotiate on its behalf.