How To Negotiate With Debt Collectors!

Learn the best technique to negotiate with a debt collector!
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Today I have a special guest post from Luke McCann, owner of  He has worked in the debt collection industry for over 15 years and now currently helps small businesses collect payment on their invoices.

He has seen the good, the bad, and the ugly from the debt collection process side. Today he is sharing tips for how you, a consumer in debt, can negotiate and get through the debt collection process and start your debt-free journey!

How To Deal With Debt Collectors

Learn how to deal with debt collectors.
You have decided to finally get out of debt and have gone through all of your bills to formulate a plan of action.  This can be an exciting yet overwhelming time if you have several past due debts to clean up.

While attempting to live a debt-free life is noble, my former work as a debt collector allowed me to see the terrible things that creditors will do to keep you from paying off the balance.  High-interest rates, late fees, random fees that make zero sense, you name it and I have seen it!

Trust But Always Document

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Often, when you call in to get information regarding your account, you will be talking to someone who has worked for the company for less than a year.  The debt collection industry is notorious for high turnover, so keep in mind you may be talking to a 19-year-old kid with zero personal finance experience.

If the debt has been charged off and sold to another company, it is highly suggested to ask for documentation in writing. Details such as the name of the creditor, amount owed, and interest rate, should all be easily obtained.

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Once you have this information, you will have a clear understanding of how much is owed to the creditor.  Many times, a debt collector is only worried about collecting a quick payment and moving on, so the information they provide over the phone should be taken with a grain of salt.

Debt collectors are paid to collect dollars, plain and simple.  If they spent their shift being completely open, honest, and helpful – they would collect little to no money and would be fired within 2 weeks!

Sadly, debt collectors cannot be trusted.  Document everything during a conversation.  Get the debt collector’s name, employee number, and even the manager’s name.  Documenting each conversation will help you stay organized and up to date on how the account is progressing.

After you have obtained a clear picture of how much is owed and how many fees and interest is being charged, it is time to start negotiating.

How To Negotiate With A Debt Collector

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If you are working with a debt collection agency for small businesses, they will typically be willing to negotiate with you because they understand that something is better than nothing.

Some creditors will even offer payment plans.  For example, the credit card company I previously represented, offered a zero APR and all fees waived after an account was four months past due.  In addition, if you paid three consecutive minimum payments in a row, the account was brought back to a current status.  It was a rare plan that offered hope to past-due customers.

If you have fallen past due, ask creditors what fees they would be willing to waive.  Many times, interest charges are not eligible to be waived, but late fees and over the limit fees are easily waived.

For example, I have witnessed debt collectors waive over $200 in fees for only a $50 payment.  Debt collectors are motivated to get payment; they aren’t worried so much about the bottom line of the company they represent.

Remember, “It never hurts to ask” when it comes to negotiating with a debt collector. A simple question can lead to saving hundreds of dollars!

Never Pay Over the Phone

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Debt collectors will always push for payments over the phone.  If you tell a collector the payment is in the mail, you can only imagine the eye roll you get.

Collectors realize that a “check by phone”, or ACH debit over the phone, is a secure and fast payment method.  This is why they will push so hard to get your routing and checking account number on file.

Once you make a payment over the phone, the checking account information is forever saved within the collection agency’s system.

I have heard many stories of collectors pulling payments out of checking accounts without authorization.  It is 100% illegal, and any collector caught doing this would be fired on the spot.  Unfortunately, debt collectors usually aren’t thinking about legalities and career advancement.

The average collector is focused on getting their next monthly bonus. That temptation can lead someone with less than perfect morals to process payments without authorization.

To avoid future headaches, never pay over the phone with a collection agency.

If you notice a payment is taken from your checking account without authorization, contact the collection agency and ask for the recorded phone call of the transaction.  All check by phone payments should be audio recorded and saved with the file in the event of a dispute.

Should You Pay On The Balance?

It is common knowledge that the original creditor will charge off accounts and resell them to other debt collection agencies for pennies on the dollar.

Mainstream advice will tell you to negotiate settlement offers at this point.  You may have heard stories of a $50,000 account being settled for $2,000!  Many collection agencies will be glad to settle an old debt because the damage has already been done to your credit.

Essentially, there is very little a collection agency can do at this point to further ding your credit.  If you are able to settle at a lower amount, the debt collection agency will update your credit bureaus showing the account was settled and paid off, but that is only after your credit has already taken a deep dive.  The small benefit of paying off these old charged-off accounts is not worth the amount of money it will cost.

After the debt is “charged off,” and sold to a collection agency, your credit report will show the charge off for 7 years.  After the 7 year period, the debt and charge off will fall off your credit report.

While I admire anyone who wants to pay everything owed, the end goal should be getting out of debt and rebuilding your credit. Some of these accounts that are several years old can go unpaid and it will not hurt your credit further.

Remember, if you are in a hole, stop digging! The goal is to climb out of debt and move into a new phase of life that is debt and stress-free.

What Should I Offer As A Settlement Payment?

This depends on the type of debt, but most everyone will be dealing with credit card debt.  If you have some accounts that are several months past due, but have not been charged off, then you could possibly settle the accounts.

For example, if you have an account that you owe $10,000 on, and the account is near being charged off and sold to another agency, creditors will sometimes take a settlement as low as 50%.

Many times, the percentage a creditor will take off the total balance will be between 25% – 40%.  If you do decide to settle an account, understand that it will show up as a settlement on your credit report which is not the same as the account being paid off in full.

It is better to settle an account than allowing the account to be charged off.  Before you decide to settle the account, make sure the account has not been charged off previously.  Pulling your credit report to see the status of the account in question will give you a definite answer to who owns the account.

Debt Collectors Are Human Too!

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I have shared the negative stories of debt collectors but most are honest people with morals.  While debt collectors can be aggressive and rude, remember they have bad days like everyone else.

Think about a job where you are constantly told “no” all day long.  As a cherry on top, you get cursed at and lied to daily.

Treating a debt collector with respect is the easiest way to make progress in negotiating on the account and getting it paid off.  If a debt collector views your file and notices you have cursed out the last 5 coworkers, do you think they will be open and warm, or closed and combative?

Keep the debt collector honest with documentation about who they are and what has been discussed.  Do not talk down to the collectors and make a bad job even worse for them.

Remember, the goal is to pay as little as possible and get out of debt.  Be friendly to the debt collector and allow them to help you get this balance paid off quickly.

The Hard Work Is Completed

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Making a plan to get out of debt and break the cycle of being broke is a hard decision. Being in debt is a lifestyle choice, one that can be as hard to break as drinking or smoking.
Now that you have made the decision to become debt-free, I hope the tips above will help you avoid the tricks that professional debt collectors often play.

If you follow the tips given, you will dodge the traps and save thousands in the process of becoming debt free.

Author Bio: My name is Luke McCann, owner of  I have worked in the debt collection industry for over 15 years and hope sharing my knowledge will help others obtain the goal of eliminating debt.

**Ryan from Arrest Your Debt here – I appreciate Luke’s take and insight into the credit industry.  I hope this information can clear up the debt collection process for you and give you some focus on what your next step should be.  If you haven’t subscribed yet, please subscribe by email below so you don’t miss any of my future posts!  Keep at it my friends – you work too hard to be this broke!