How to Negotiate With Debt Collectors (And Why You Always Should)

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There is no lack of crooks out there pretending to be debt collectors, harassing you by call and text day after day. If you block these numbers, you want to be sure that they are scams and that you are not ignoring legitimate debt collectors (who can find you on social mediaBesides).

Legitimate collection agent calls mean that your original lender, such as a bank or hospital, sent your account to a collection agency in an effort to see the debt paid. However, you might be surprised by the willingness of many agents to accept partial payment or a proposed reimbursement plan. Here’s how you can negotiate your debt when a collection agency contacts you.

Don’t ignore calls from a debt collector

With all the robocalls terrorizing us these days, it’s only natural to let most unknown numbers rot in your voicemail inbox. However, if it is a legitimate debt collector, it is not advisable to simply ignore the call. Before you accept the call or call them back, be sure to review your rights under Fair Debt Collection Practices Actdescribed below.

Know your rights under the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) limits what debt collectors can do when collecting certain types of debt, including auto loans, credit cards, medical, mortgages, and a few others. Some states have additional laws. Also, legitimate debt collectors cannot threaten or harass you. Revise all your debt collection rightsto protect you from being scammed or revealing compromising information over the phone.

Basically, debt collectors are required to provide the following key information: the name of the creditor, the amount you owe, which you can claim, the name and address of the originating credit, and the fact that you can dispute the debt.

Learn about debt

Use your rights listed above to gather all the necessary information about your debt. You want to know who you owe money to and how much you owe them. If you choose to dispute a debt, the debt collector must verify it. As long as you make your dispute in writing within 30 days of receiving the verification notice, the debt collector is not permitted to contact you again until they send you this written verification of the debt.

Be sure to ask for all the information you need to come up with a trading plan. As discussed above, an agent may decide to accept your partial payment offer rather than go through a long and arduous collection process.

What not tell a debt collector

Even if you are fairly certain that you owe the debt claimed by the collection agency, don’t confirm it yet. According to US Newsthe oral confirmation can validate the claim or extend the limitation period for collection.

If it’s an old debt (say, three to six years), don’t make a payment until you’ve spoken to a lawyer. You could be outside your state’s statute of limitations on the debt.

Build your trading plan

Once you’ve confirmed the debt is legitimate, it’s time to negotiate a payment plan that’s right for you. This conversation with a debt collector could be more fruitful than any initial negotiation you attempted with the original creditor. The Consumer Financial Protection Bureau (CFPB) describes two main ways to negotiate your debt:

Partial refund. Although the debt collector may demand the full amount owed, in some cases they will be willing to accept a lower amount. Explain your financial situation and start your negotiations low. The CFPB suggests starting by offering cents on every dollar you owe, say about 20-25 cents, then 50 cents on every dollar, then 75.

A payment plan. Review your monthly budget and debt priorities. Falling behind on other bills to prioritize this debt could lead to bigger problems down the line. If the original lender’s payment terms were unmanageable for your financial situation, you may be able to negotiate a lower monthly amount with the collector. Determine how much money you can reasonably spend on paying off a recurring debt.

Keep track of everything

When you reach agreement on a repayment or settlement plan, get everything in writing. Obtain clear documentation that the debt will be accepted at a lower rate and will be reported as “paid in full” or “paid as agreed”. Otherwise, the collection agency may backtrack on verbal promises to stop collection efforts or try to renegotiate the amount owed down the line. Don’t make a payment until you have a written record of the agreement.

Then, once your debt is paid off, get written confirmation that you have settled your debt. The last thing you want is for a previously paid debt to resurface with another agency calling to collect it.

The bottom line

It is important that you know your rights to first verify the debt and then dispute it to the best of your ability. You might be surprised by a collection agency’s willingness to negotiate your debt down to partial repayment or a more manageable repayment plan.

Two final reminders: Beware of third-party companies that claim to settle your debts for you and attempt to charge you money to do so. This could be yet another scam to add to your plate. Second, this fact may make you skeptical of calls from debt collectors in the first place. This does not mean that you have to pay the original creditor directly. American News explains that at the time the debt collector contacts you, he is responsible for the debt and it is in your interest to negotiate directly with him.

If a tax collector harasses you, you can file a complaint with the CFPB on line or by calling 855-411-2372, as well as with the Federal Trade Commission on line or by calling 877-382-4357. You can also report them to your state attorney general.

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