Negotiating with debt collectors stinks! But when you know how to deal with debt collectors, the laws that govern them, and the games they play, then you can negotiate the best deal possible to pay down your debt.
In this post, I'll give you 10 solid tips for dealing with debt collectors you can use right now to eliminate your debt for good!
Negotiating with Debt Collectors Isn't Easy
I know many people that have had to deal with unpaid debt. Being behind on your bills and dealing with a debt collections agency is never a pleasant experience.
It's a tough experience to deal with debt collection agencies, because many don't hesitate to use every tactic they can, legal and illegal, to collect the money owed.
The process is humiliating. It takes a serious toll on your mental and emotional energy. It brings a level of stress into your life you never thought you'd have to go through when you incurred the debt in the first place.
When the debt collectors start calling, the first thing you have to tell yourself is that you WILL get through this and you WILL come out better on the other side.
You have to muddle through the process, find a way to resolve it, and move on with your life. It may not be easy but you CAN get it done.
Some Debt Collectors Will Do Anything to Get Your Money
The next thing to do when the collectors start calling is to realize who you're dealing with. Once your debt is turned over to a collection agency, you are typically dealing with bottom feeders. This is especially true if the debt is a few years old.
These agencies buy your debt for pennies on the dollar and hope to collect at least a little something to make their investment worthwhile. To maximize their take, they will use every tactic they can to hound you into sending them money.
They have been known to call incessantly, hurl insults, curse people, yell, scream, contact neighbors and relatives, and anything else they can to browbeat or embarrass you into giving them some money. Even though there are debt collector laws they have to follow, many of them don't.
10 Tips For Negotiating With Debt Collectors
You Have Rights
But you have rights when it comes to negotiating with debt collectors. The more you know about how to deal with them the better. So here I'll share a few tips to help you navigate the debt collection nightmare you might be experiencing:
Don't Ignore Your Debt
If you're contacted about a bad debt, ignoring it won't make it go away. In fact, it just makes things worse due to additional fees, lawsuits, and incessant phone calls. If you owe the debt, acknowledge it and do your best to work out a settlement.
Keep Track of All Phone Calls
Write down the time, date, who you talked to, and the details of each call. This helps you keep track and stay on top of what's happening with your account. You'll also be able to document any harassment that may be happening.
Keep Your Emotions in Check
Many debt collectors want to get you angry and emotional. When you're emotional, you're more likely to do whatever you can to erase the debt. When you get too emotional negotiating with debt collectors, you're much more likely to make a stupid decision that costs you even more money and trouble later.
If they start playing emotional games, tell them to call you back when they're ready to talk rationally, then hang up.
If You Don't Think You Owe the Debt, Then Dispute It
Request proof of the debt in writing. If you have any documentation that says you previously paid off the debt, provide them with a copy. Never send the original!
NEVER Give Them Access to Your Bank Account
If you work out a payment schedule with the debt collector, NEVER, EVER let them autodraft your checking account for a monthly payment!
They will continually ping your account. Then, when they see a significant amount of money there, they will drain your account. They have no qualms about leaving you with no money and a lot of overdraft fees.
Only Agree to a Settlement You Can Afford
Never agree to a settlement you know you can't meet just to get them off your back. All that does is delay the pain, and you'll be back in the same situation soon enough. Only agree to pay what you know you can afford, and no more.
Never negotiate a debt settlement that leaves you without enough money for food, shelter, transportation to work, and other necessities.
Try to Settle the Debt for as Little as Possible
The one thing you have working in your favor is that negotiating with debt collectors usually works. They only paid pennies on the dollar to buy your debt. Typically, you can negotiate them down to half of what you owe or less!
Get it in Writing
Whenever you come to an agreement on settling your debt, make sure to get all the details in writing so you will have proof later on if they suddenly decide to deviate from the agreement. Getting it in writing helps to keep them honest.
When you finally do get the debt paid off, make sure to get it in writing that the debt is paid in full and the account is closed. Keep that piece of paper FOREVER!
What If You Get Sued for the Debt?
Respond to the court immediately. On the court date, take every bit of documentation you have so the court can work out a fair settlement for your debt. If you don't respond or show up in court, you may end up with a default judgment. That means your wages will be garnished and bank accounts frozen.
What Else Can You Do?
One thing I've seen a lot of people do, is to find a side hustle to help you pay your debt. There are a ton of ways to earn extra income that you can use.
I won't get into the details here because it could take all day. However, I've written plenty of posts about making extra money over the years. You can find a complete list on the CFF Money Making Ideas page.
Master Your Money
In the end, I'm sure trying to negotiate with debt collectors is surely not how you want to spend your time. The best thing you can do to avoid that fate in the future is to start changing how you deal with money. A great place to get your start is to sign up for my FREE 10 day Master Your Money email course. It'll get you started with the basics, then show you how to keep moving ahead and fix your financial problems for good!
Question: Have you ever had to negotiate with debt collectors over an unpaid bill? Was it humiliating? Did they use scummy tactics? Tell us about your experience in the comments.
Any agreements for making debt collection payments should be confirmed in writing and signed by a representative of the debt collector before sending in any payments. This avoids misunderstandings about the amounts to be paid or time period to make payments.
Absolutely right- Great tip!