Negotiating with and Paying Off Debt Collectors

Carl Andrews

Financial Advisor
Updated: 7/2019

Negotiating with and Paying Off Debt Collectors

If you find yourself in a situation where debt collectors are hassling you for money, it’s essential that you understand how to approach the process. Debt collectors will do anything to get you to pay your debts – they’ll often make threats or deceitful claims to help pressure you into paying what you owe. If you do feel that you’re being hassled too much by a debt collector, it’s essential that you read this article and do some additional research.

In This Article

Tips when Negotiating with Debt Collectors

In this article, we’ll explore the concept of negotiating with debt collectors. Using the information on this page will help you better equip yourself to deal with debt collectors and the potential issues associated with this form of debt recovery. If you feel this type of information is relevant to you, make sure to read all the details provided in this article.

The Purpose of Debt Collectors

Debt collectors are typically used by lenders and other creditors to collect funds from borrowers. If you have defaulted on a debt, then a debt collector may be used to come and collect the debt from you directly. Sometimes certain debt collectors will actually purchase the debt from the creditor and then take it upon themselves to collect the debt from you.

Debt collectors are seen as a last resort from lenders who are trying to recuperate funds they have lost. If you are contacted by a debt collector, there’s a high chance that a creditor has already been in contact multiple times to try and recuperate the debt. If this is the case, it’s essential that you know how to approach the situation. The problem is that many times your credit will already be damaged from the fact that you have defaulted on the original debt. For this reason, it’s important to take care of the situation as quickly and professionally as possible. So let’s get start with how to pay off debt quickly.

First Things First: Work with Lenders

Before we get into the specifics of negotiating with debt collectors, it’s important to understand the benefit of working with a lender before this occurs. As mentioned previously, a debt collector is often a last resort for lenders. Lenders don’t want to use debt collectors if they don’t have to – it costs them money and means they collect less of the original debt. For this reason, you should try and work with a lender before a debt collection situation comes into place – it can help you avoid many headaches.

Because lenders want to avoid using debt collectors, it’s a good idea to try and negotiate the debt prior to having any problems arise. If you can’t pay off your debt immediately, you should offer a payment plan to your creditor. If they are willing to work with you to pay off your debt, you’ll have a much easier time alleviating any problems.

Negotiating with and Paying Off Debt Collectors

Tips on Negotiating with Debt Collectors

If it’s already too late, you may find yourself in a position where you have to work with a debt collector to pay off a debt. If a debt collector contacts you about money that you owe, make sure to be prepared with how to negotiate with the collector. Many debt collectors rely on people’s ignorance to coerce people into specific deals or payments. Also, if you try and beat the system, you may find yourself in a worse position than when you started.

In this section of our article, we’ll take a look at a few tips on how to negotiate and deal with debt collectors. If you’re in a debt collection situation already, make sure to pay close attention to this section of our article.

DOCUMENT Everything

First, you need to make sure that you document everything. You don’t want to be in a position where a debt collector makes different claims or offers and you don’t have evidence to support them. If you’re sent mail from a debt collector, make sure that you keep hold of it and file it in a secure place – you may need it at a later date if legal action is brought against you for failing to pay a debt.

Also, make sure to keep track of any electronic correspondence and take notes on each call that you receive from a debt collector. This can help you stay on top of their processes and ensure you can ‘back up’ any claims if they try and change any agreements or stipulations. It’s very important that you portray yourself as competent and organized – this is the best way to avoid getting taken advantage of in a debt collection situation.

Don’t Agree to Anything You Can’t Fulfill

If you’re being harassed by debt collectors, there may come a time when you try and wriggle free by making promises you can’t keep. Debt collectors are very adept at keeping track of your promises or commitments – they often record your conversations as proof of your agreements. For this reason, it’s very important to avoid making any promises that you can’t keep.

Only make agreements with debt collectors if you know that you can honor them. If you make agreements you can’t honor, this will only come back to bite you in the end. We highly recommend you put a lot of thought into any agreements you make with a collector. Assess your financial situation and determine if you’re able to agree to a certain payment plan or ‘pay-by’ date.

Ask for Collection Agent Names

If you’re contacted by a collection agent, it’s essential that you ask their names and keep track of who you are in contact with. If you’re speaking with multiple agents from the same company, there’s a chance you may get inconsistent information. If you want to speak with the same agent every time you get in contact with the debt collections company, make sure to request the person by name.

Some collections companies will already put you in place with a single debt collection agent, but it’s better to be safe than sorry by requesting a consistent agent.

Ask for Clarification

If you’re contacted by a debt collector, you need to ask for specifics about your case. Make sure you understand how much you owe, when it’s due, and if any legal proceedings are being brought against you. You should also clarify what debt is being collected and the name of the debt collection agency that is contacting you. Always ensure you are well informed about your particular situation.

Explain Your Situation – Don’t Change Your Tune

If your circumstances are not allowing you to pay your current outstanding debts, you should make sure to convey this as clearly as possible to the debt collector. Don’t be offended if the collection agency doesn’t believe your story at first – they deal with liars every day. Make sure that you stick to your current story and ensure that your details remain constant. Debt collectors are looking out for people who make up evasive and ever-changing stories.

If you can establish a real, significant story for why you can’t pay your debts immediately, a debt collector may be more likely to provide you with time to alleviate the debt.

Ask for Arrangements If Needed

While many people may be able to pay back their debts immediately, others may need time to pay off the debt. In some cases, you may need an instalment plan to help you spread the costs over a prolonged period of time. Many debt collectors may refuse an instalment plan, but they also know that taking proceedings to court may cost them additional money.

Explain your situation to the debt collector and expand on why you can only afford a certain amount per month. This may help you get an instalment agreement that can ensure you don’t have to pay back the full amount owed straight away. You should only agree to an instalment plan if you know you can afford to make the payments.

Negotiating with and Paying Off Debt Collectors

How to Pay Debt Collectors

If you need to pay a debt collector, you might not know what forms of payment they accept. The truth is that payment methods will depend on the debt collector. Many people pay debt collectors using bank transfers or debit cards, but some debt collectors may accept credit card or checks. Make sure that you understand what type of payments they accept before you make any payment agreements. You can ask your collection agent what types of payment they accept prior to beginning discussions.

How Long Can a Debt Collector Legally Pursue Old Debt?

If you’re someone who is being pursued for a very old debt, it’s essential to understand the statutes of limitation on previous debts. For example, if someone is pursuing a debt that is much older than the statute of limitation in your state, you won’t need to pay the debt and you can report the debt collector for pursuing an invalid debt.

The amount of time it takes for a debt to expire will depend on the state that you live in. In most cases, it will be between four and seven years. You should check with your local state laws and regulations to get a better understanding of when your debt expires. Don’t a let a debt collector convince you that you owe an outstanding debt that is already expired.

Watch Out for Debt Collector Scams

Another important thing to keep in mind is debt collector scams. You don’t want to be in a situation where you end up paying money to a scam artist because you think you owe a debt. There are plenty of scams that involved scam artists using fake debt collection companies to extort money from individuals. If you are called by a collections company, make sure that you owe the debt they’re addressing. You should always ask for the name of the collections company and proof that they’re a legitimate organization.

You should also make sure to contact the creditor that you defaulted with and ask them if the debt collection company is their partner. This can provide you with added security. Once you know the name of the debt collection company that is calling you, use the Better Business Bureau to check if they’re a real company. You can then find their contact information online and call them to confirm they were the firm that called you. It’s extremely important to understand the importance of due diligence when you receive a call from a collections company.

Fake Summons from Debt Collectors

The debt collection industry is riddled with bad actors – many may try and deceive you into paying money using fake documents or summonses to court. Debt collection agencies know that people are scared of being sued for a debt, so they may use a fake court order to try and pressure you into paying the money that you owe. If you receive a summons in the mail from a debt collection agency, you should call your local authority to check if the summons is real.

Many debt collection companies may use fake summonses that use vague or non-legal wording to try and deceive you. While this isn’t common practice, it’s important to be aware of the potential use of fake summonses.

Negotiating with and Paying Off Debt Collectors

Reporting Debt Collection Companies

If a debt collection company is harassing you or stepping outside of certain legal boundaries, it’s within your rights to report them to Consumer Finance – a government organization. Debt collection companies are not legally allowed to harass you – but many may try to. For example, they are not allowed to call you consistently or harass you via constant contact. In addition, they’re not allowed to threaten you or use abusive language or behavior. If a debt collection does harass you or threaten you, make sure to contact Consumer Finance immediately.

Tips to Keep Debt Collectors Away

If you feel that you’re in a situation that may result in a debt collector being contacted, it’s important to start looking at ways to avoid major issues. There are a few last resort options that can help you improve your chances of avoiding debt collection. In this section of our article, we’ll take a look at two common ways people avoid debt collection issues and get out of debt. Check them out below.

Debt Consolidation

Debt consolidation is a technique that many Americans use to escape high-interest debt. If you feel that you have too many debts at high interest rates, you might want to consider debt consolidation as an option. With debt consolidation, you take out a consolidation loan at lower interest rate and then pay off your current debts with your new financing. You then pay back the new loan over the term agreed upon with the lender.

Not only does this help you reduce the amount of interest that you’re paying, it also means that you’ll have a single loan payment instead of multiple payments. This is a great way to ensure that you stay on top of your debts without having to worry about missing payments. If you think that you might default soon, debt consolidation is an option that may be able to keep the debt collectors away. Make sure that you get a debt collection loan that has a much lower interest rate than your current debts – otherwise, you will end up not benefiting from the new financing.

Debt Settlement

If you think a lender is about to contact a debt collector, and you can’t afford to pay the debt, you might want to find a debt settlement company that can help you negotiate with your lender. Debt settlement is a method used to pay down debts at a lower amount than originally owed. While many creditors will not accept this form of payment, others will.

If you contact a debt settlement company, they may be able to negotiate on your behalf to reduce the amount that you owe. You will still need to pay a substantial amount of your debt, and you will need to pay a small fee to the settlement company. Keep in mind, this is not always an option and will depend on the creditor that you owe money to. Make sure that you use a debt settlement company with a good reputation – head online and check reviews before you make any debt settlement agreements.

Don’t Repeat the Same Mistakes

If you do manage to pay off a debt collector or make an arrangement, it’s important that you don’t make the same mistakes in the future. It’s essential that you start paying back your debts on time and stick to a strict budget. You don’t want to end up in ‘square one’ in a few years by making the exact same mistakes.

In the modern world of finances, there are plenty of online tools that can help you set a budget and understand how much you can afford to spend. You should also be looking to avoid high-interest debt in the future – it will only make it harder for you to pay back your current debts.

Most debts and defaults are off your credit report within seven years. This may seem like a long time, but at least you know there is an end in sight. Once your negative items are removed from your credit report, your credit score will begin to improve and offer you the ability to move forward financially. Don’t look back – make sure that your future financial decisions put you in the right place to achieve financial freedom and avoid past errors.

Verdict

Remember, it’s essential that you understand how to communicate with debt collection companies. These firms are experts at trying to convince you to work with their terms. If you want to take back control of the process, don’t allow them to use their tricks against you. Using the information provided in this article will help ensure that you’re an expert at negotiating and paying debt collectors. It’s very important that you approach the situation professionally and with enough knowledge to protect yourself.

You should also always make sure that you’re being contacted by a real company. Don’t let a scam artist use your vulnerable position to steal your money. Tell all debt collection companies you need to check that they’re legitimate before you enter into any form of negotiation. You should also make sure to keep track of and report any abusive behavior from a debt collection company. Don’t let yourself be harassed by a debt collector – it’s against the law.

If you have any more questions about debt collection make sure to check out some of our other articles – there are also plenty of other great resources online. We also provide our readers with in-depth information on debt consolidation and other forms of debt relief strategies. If you have interest in avoiding debt collection through any of these methods, we have tons of great content on the subject. Check it out!

FAQ

If you’re currently dealing with debt collectors, you may have some important questions about their capabilities and functions. This section of our site is dedicated to publishing some of our most frequently asked questions. If you’re wondering more about the debt collection industry and your rights, check out our FAQ sections below!

The What’s

This section of our FAQ page will cover the ‘what’s’ – check it out!

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What is a debt collector?

A debt collector is a company or individual that is hired by creditors or lenders to collect debts. If you don’t pay your debts or you default on your current obligations, a debt collector will often be used to find you and collect money from you. Debt collectors will often call you and try and convince you to pay back your current debts. They may also sue you for funds if you refuse to pay.

What happens if you ignore debt collectors?

If you ignore a debt collector, the collections company may file a lawsuit against you to seek the money you owe. This is a major issue if you want to avoid legal complications. You may also see significant items appear on your credit report. Debt collectors will typically continue to chase you if you ignore them.

What can debt collectors do?

Debt collectors can contact you to ask for payment of previous debts. They can also file legal proceedings against you if you fail to pay. They’re not allowed to harass you or anyone you know – nor can they abuse you with rude or offensive language. If a debt collector is harassing you, contact Consumer Finance and report them.

What to do if a debt collector sues you?

If a debt collector sues you, you will typically need to respond to the lawsuit with proof that you do not owe the debt. If you choose not to respond or attend court, you will typically have the case decided against you. The debt collector will then have further legal rights to seek the money.

What is a debt validation notice?

A debt validation notice is a notice from a debt collector that a debt is owed. You then have 30 days to dispute the debt before it is considered valid. Once a debt is considered valid, it can be listed on your credit report as valid.

The How’s

This section of our debt collection FAQ page is dedicated to the ‘How’s’ – check it out!

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How long can a debt collector legally pursue old debt?

This will depend on the state that you’re in. You should check with your local authorities to see the statute of limitation on a debt. Most states have a statute of limitation between four and seven years. If you think your debt is expired, don’t agree to pay anything until you check with your local authorities.

How to deal with debt collectors when you can't pay?

If you can’t pay a debt, make sure to explain your situation with your debt collector. You need to stick to the same story – they are used to dealing with liars all the time. Try and see if they will allow an extension or payment plan. This can be the best way to offset your liabilities.

How to tell if a debt collector is legit?

There are a lot of debt collection scams out there – it’s essential to ensure the company you’re working with is legitimate. If you want to check if a debt collector is legit, make sure to ask the debt collector what company they work for. You should then look up the debt collector and contact their publicly available information to confirm they intended to contact you.

How to deal with debt collectors?

You should always take notes and document your conversations. You should make sure to never agree to terms you cannot fulfil. If you cannot afford to pay the debt collector, make a concerted effort to ask for a payment plan or reduced debt payment. You can sometimes use debt settlement companies to try and help negotiate with collectors.

How often do debt collectors take you to court?

This depends entirely on the debt collector and the amount of money that you owe. It also depends on how long you attempt to avoid payment.

How many times a day can a debt collector call?

There is no specific limit on the amount of calls a debt collector can make. This being said, they are not allowed to call you repeatedly or harass you. If you feel they are harassing you, take notes and report it to Consumer Finance.

How to pay debt collectors?

This depends on the debt collection agency that is contact you. Make sure to ask them what forms of payment they accept before you agree to pay anything.

How to settle with a debt collector?

If you’re looking to settle with a debt collector, you should provide reasons for not being able to pay the full amount. You should also try to offer a large, lump sum amount of money. This is likely the best way to convince a debt collector to accept your payment. Remember, they’re sometimes willing to negotiate if they believe you don’t have the money.

How to pay off debt collectors?

To pay off debt collectors, you will need to talk to them about their accepted payment methods. Different debt collectors have different accepted payment methods.

How to negotiate with debt collectors for a lower settlement?

If you’re looking to negotiate with debt collectors for a lower settlement, you’ll typically need to provide a reason for why you can’t afford to pay the debt. You should also make a lump sum offer to the debt collector – this can help improve your chances. You may also want to use a debt settlement company to help.

How do debt collectors work?

Debt collectors contact debtors when creditors are no longer able to collect the debt. They act on behalf of creditors to recuperate as much debt as possible. They typically call and follow up with debtors and try to reach a payment agreement.

How much will debt collectors settle for?

This will depend on the debt collector, the debt you owe, the length since last payment, and your personal financial situation. It’s hard to predict what they will accept without all the above details.

How many calls from a debt collector is considered harassment?

Unfortunately, there is no set amount of calls that is considered harassment. Debt collectors are not allowed to call you repeatedly. If they do call you non-stop, you can make an official complaint to Consumer Finance.

How to stop wage garnishment from debt collector?

You will need to attend credit counselling and seek help from local authorities. You should then object to the wage garnishment and attend the wage garnishment hearing – you can try and negotiate during this hearing. You can then challenge the judgement and attempt to continue negotiations. Don’t give up!

How to sue debt collectors for FDCPA violations?

If you want to sue a debt collector for FDCPA violations, you should attempt the lawsuit in state court. This is the best way to bring action against a debt collector if they violate FDCPA regulations.

How to stop fake debt collectors from calling?

Spam calls are a huge issue in the United States. Unfortunately, there’s not much you can do to fix this problem at this stage. The best remedy is typically to block as many of the spam numbers as you possibly can.

How do debt collectors find your bank account?

The debt collector will typically need to use a subpoena to find your bank accounts. This will provide them with all of your financial information.

How to get out of paying debt collectors?

It’s hard to get out of paying debt collectors. The best thing to do is to pay them as soon as you possibly can. If you can’t pay a debt collector, we suggest that you try and negotiate a settlement with the collector. Be honest about your financial situation and offer as large of a lump sum as you can afford.

How to find out what debt collectors you owe?

If you’re trying to find out what debt collectors you owe, you should check your credit report and contact any collections agencies that are filed on your report.

How to stop debt collectors from calling?

The best way to stop a debt collector from calling you is to pay them. If they harass you, warn them you know Consumer Finance laws surrounding debt collectors and harassment. You can then report them to Consumer Finance for harassment.

How to handle debt collectors?

The best way to handle debt collectors is to be honest about your financial situation and take notes of your interactions. You should always document your conversations so you have proof of their statements and commitments. Let them know you are aware of Consumer Finance laws protecting you from harassment.

How to get rid of debt collectors?

Unfortunately, the best way to get rid of debt collectors is to pay them. If you want to stop a debt collector from calling you, try and come to a payment agreement as quickly as possible. If a debt collector is legitimately harassing you, report them to Consumer Finance – it is illegal for a debt collector to harass you.

How much do debt collectors pay for debt?

This is a complex question that includes a wide range of variables. This will depend on the amount of debt, the length since last paid, the risk of the borrower, and the area the debt is owed. There’s no set amount of how much debt collectors pay for debt – this will typically be negotiated with creditors.

How do debt collectors get family members phone numbers?

Debt collectors may be able to access family member phone numbers via publicly accessible databases that collect personal contact data.

How long can a paid collection stay on your credit report?

Credit report items will typically stay on your credit report for seven years. If you have a paid collection that is still on your credit report after seven years, you can contact the credit bureau and request for the item to be removed.

How can I raise my credit score in 30 days?

The best way to raise your credit score in 30 days is to pay down your current credit card debt – it’s a huge factor in your credit score. You can also check your credit report for errors and request they be removed.

How do I get a charge off removed from my credit report?

It can be hard to get a charge off removed from your credit report. The best way to do it is to contact a credit repair company and ask them if they think it is possible. If the charge off is a mistake or done incorrectly, it can be much easier to remove.

How long can you legally be chased for a debt?

It depends on the state that you’re located in. In many instances, the limit of time you can be chased for a debt will be between four and seven years.

How long does a debt collector have to validate a debt?

After you receive a phone call, you will typically receive a validation notice at your mailing address within five days. You then typically have 30 days to dispute the debt before it is considered valid.

How long can collection agencies report to credit bureaus?

Your debt is typically valid between four and seven years. This is typically the time limit in which collection agencies are allowed to report your debt to a credit bureau.

Other FAQs

In this section of our FAQ page, we overview some other commonly asked questions about debt collection and related topics.

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Can original creditor and collection agency both report?

Yes. The original creditor can report a charge off and a debt collection agency can then report a collection. This may seem unfair, but it is the harsh reality of the situation.

When will a debt collector sue?

Unfortunately, this is a question that can’t always be predicted. This will depend on the debt collector and how they choose to approach the situation. It will also sometimes depend on the amount of debt that you owe.

Do collections ever go away?

Yes. Most collections will be removed from your credit report after seven years. If they are not, you can contact the credit bureau to ask for the removal of the collection.

Do paid collections hurt your credit?

Typically, no. In most cases, paying collections can have a small positive impact on your credit score. In other cases, it won’t do much to impact your credit score at all.

Does paying off debt hurt credit?

Paying off debt will typically improve your credit once it is reflected in your account. In some cases, it will not make much of a difference at all. It depends on the credit reporting body that you’re using to score your credit.

Can you get a collection removed from your credit report?

In some cases, yes. This will depend on the collection and if there are any mistakes or technicalities involved. You can contact a credit repair company if you want advice on whether your collection is removable.

Can I pay the original creditor instead of the collection agency?

In many cases, you cannot. For example, if a debt collector bought the debt, they are then entitled to collect the debt by themselves – they own the debt. If they are simply tasked with collecting the debt, you may be able to pay the original creditor. Still, you’ll need to make sure the debt collector will erase the balance owed in this circumstance.

Can a disputed debt be sent to collections?

If you have a legitimate dispute on a debt, it should not be sold to collections. This being said, it can happen. Make sure to tell the debt collector that the debt is already disputed.

Who do I call to fix my credit?

There are plenty of credit repair companies in the United States. You can find many of them online. Make sure to check their reviews on consumer watchdog groups before using their services – you want to use a credit repair company with a good reputation.

Can paying off collections raise your credit score?

Yes. Paying off collections can sometimes raise your credit score – but not often by much. You should contact the debt collection agency if they fail to report that you paid your debt. Don’t rely on this method raising your credit score substantially. In many cases, the damage is already done.

Can I pay original creditor instead of collection agency?

In most cases this is not possible. Many creditors sell the debts to collections agencies, which means that the debt is now owned by the debt collector, not the creditor. Also, if you do pay the debt off to the original creditor, the debt collection company may not recognize it – which will continue to damage your score.

Can creditors remove derogatory items?

Yes. Creditors are able to remove derogatory items if they want to – they are not required to do this. Many lenders will not want to remove derogatory items. Others may be willing to remove the items if you agree to make a full and timely payment of the debt. Remember, once your debt is sold onto a collections company the damage is likely too late. For this reason, try and negotiate with lenders as much as possible.

Do collections go away after 7 years?

Yes. In most cases, collections will be removed from your credit report after seven years. If not, you should contact the credit bureau to request removal.

As you can see, there’s plenty to learn about debt collection and its related topics. If you find yourself being contacted by debt collectors, it’s essential that you understand the process as much as possible. Our website has tons of great resources related to debt collection, debt consolidation, and debt settlement – make sure to check it out if you have any more questions!

Carl Andrews


Carl has years of experience helping people tackle debt. As a Senior Financial Advisor, he knows the ins and outs of debt consolidation and debt management. He holds a Masters Degree in Finance and according to him, not all debt problems are the same and that’s why it’s important to take a look at the different options available for your situation.

 

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