Debt collections can be a daunting experience. Many people don’t know how to negotiate with debt collectors and wind up paying more than they have to.
Remember, it’s important to stay calm and collected during these negotiations. The debt collectors are just doing their job – but you can work out a deal that works for both of you.
In this blog post, we will teach you the basics of debt negotiation so that you can get on track with your finances.
How to Negotiate with Debt Collectors
Confirm This is Your Debt and With Whom You’re Dealing
The first step in debt negotiation is to ensure that the debt is actually yours. If you have multiple debts, it’s important to keep track of which debt is from which creditor.
You can do this by requesting a “validation notice” from the debt collector. This notice will state the amount of the debt; the name of the creditor, and how to dispute the debt if you believe it’s not yours.
If the debt is valid, the next step is to find out whom you’re dealing with. The debt collector should give you their name, address, and phone number.
You can then use this information to research the debt collection agency online. It’s important to know as much as you can about the debt collector before starting negotiations.
For example, Zwicker Associates is a professional collections company that may call you about debt.
Familiarize Yourself with the Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) is a federal law for protecting consumers from abusive debt collection practices.
Some examples of debt collector abuse include:
- Calling debtors at work
- Threatening legal action that isn’t actually possible
- Harassing debtors with repeated calls or emails
The FDCPA sets out specific rules that debt collectors must follow when collecting a debt. It’s important to familiarize yourself with these rules before you start negotiations. You can find a summary of the FDCPA on the Consumer Financial Protection Bureau‘s website.
Check Hardship Program Eligibility
If you’re struggling to make debt payments, there may be a hardship program available that can help. These programs aren’t usually advertised, and not all creditors will offer something like this.
Many creditors, however, have programs that allow borrowers to reduce or suspend their payments for a period of time. Some creditors may even forgive the debt altogether.
It’s important to research your creditor’s hardship program before you start negotiations. You can find information on your creditor’s website or by calling their customer service line.
Negotiate A Lump Sum Settlement
If you’re unable to make debt payments, one option is to negotiate a lump sum settlement. This involves paying the debt in full but for a reduced amount.
For example, if you owe $1000 and cannot make payments, you may be able to negotiate a lump-sum settlement of $500.
It’s important to note that debt collectors are not required to accept a lump sum settlement. They may choose to continue trying to collect the debt in full.
Ask For the Settlement In Writing
If you reach an agreement with the debt collector, make sure you get it in writing. This document should state the amount you’ve agreed to pay, the date the debt will be considered paid in full, and any other terms of the agreement.
Once you have this document, send it to the debt collector with your payment. Do not send a partial payment – this could restart the debt collection process.
Have the Debt Settled In Full with the Credit Bureaus
If you reach an agreement with the debt collector, it’s important to have the debt settled in full with the credit bureaus. This will ensure that the debt is removed from your credit report.
The debt collector should be able to provide you with a letter confirming that the debt has been paid in full. Once you have this letter, send it to the credit bureaus.
Following these steps should help you with how to negotiate with debt collectors. Just remember to stay calm and deal with collectors as professionally as possible.