Negotiating with Creditors

Negotiating with creditors is certainly not an easy task. They may be pushy, obnoxious, intimidating, or downright rude. After all, their job is to find a way to collect money from people who haven't paid. It's your job, on the other hand, to protect your own interests while at the same time honoring your financial and legal obligations. And despite what they may say, collection agents do not have your best interest at heart. They're not concerned about your problems; they simply want to get you to pay the money that's due them or the company that they represent. Here are some tips that may help you when negotiating with a creditor or collection agency:

  • If, during the negotiation, you make a request that's denied for any reason, ask to speak further with a manager or supervisor.
  • Never agree to pay more than what you can afford. You have to be fully aware of your own bottom-line financial situation, and remain within those boundaries. The absolute last thing that you want is to negotiate a payment or settlement package and then not be able to live up to it.
  • During negotiations, do your best to uncover your creditor's bottom line, the absolute minimum that they'll accept. Depending on individual circumstances, 50- to 70 percent of the full debt is generally not unreasonable.
  • Never become intimidated by the person that you're negotiating with, even if they threaten you with lawsuits or other actions.
  • Don't lose sight of the fact that most successful negotiations take place over a matter of days or even weeks, with several rounds of offers and counter-offers. Don't allow yourself to become discouraged.
  • If you can afford to settle an account by paying a lump sum (as opposed to a payment plan), you'll have more negotiating leverage. This is the universal power of cash, and it works in all venues.
  • Remember that the person you're negotiating with is a trained professional when it comes to debt collections. A common tactic is for them to use complex legal terminology (during conversation or in correspondence) in order to confuse or intimidate you. Attend very carefully to what's being said and make sure that you understand exactly what you're being asked to agree to. If you have questions don't hesitate to consult an attorney or credit counselor.
  • Once you get an agreement hammered out, make absolutely sure that everything that's been agreed upon is put into writing, signed, and dated by both parties.
  • Don't forget that just because you owe money doesn't mean that you don't have any rights in this process. Review the Federal Fair Debt Collection Practices Act so that you'll know what your rights are. Don't let collection agents abuse, threaten or harass you; mislead you; or use unfair practices to collect any money from you.

All debt collectors are quite familiar with the Fair Debt Collection Act. But that doesn't stop some of the less-reputable ones from attempting to push the limits in order to achieve their objectives, banking on your lack of knowledge or willingness to stand up for your rights. If you believe that a creditor has violated the law in its dealings with you, contact the Federal Trade Commission (FTC).

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