How to Negotiate Settlement With a Collection Attorney

Collection attorneys specialize in the collection of past due and delinquent accounts. Businesses, collection agencies, banks and credit card companies hire collection attorneys to negotiate with consumers on their behalf. The negotiation process between a consumer and a collection attorney is similar to the negotiation process between a consumer and a creditor or collection agency. In some cases, a collection attorney may request the creditor's final approval on the terms of the settlement agreement before saying "yes."

Instructions

1

Calculate your debt-to-income ratio. Subtract your liabilities from your earned income. Based on this result, determine the dollar amount at which you can reasonably afford to settle the debt without overextending your finances. Only enter negotiations with a collection attorney will full knowledge of your financial standing.

2

Contact the collection attorney in writing or by phone. Inquire about settling the delinquent account. You can start as low as one to three cents on the dollar, depending on the age of the account. However, expect the collection attorney to push the settlement rate as high as 50 cents on the dollar or more. Ignore such pressure and keep the rate in line with what you budgeted.

3

Calculate the final settlement amount. For a settlement of one cent on the dollar, multiply the debt amount by one percent or ".01." This result is your payoff amount.

4

Request a settlement agreement in writing. Specify if you will pay the settlement in a lump sum or over time and when that lump sum or one-time payment is due. Specify the delivery options. Common delivery options include electronic transfer and phone payments.

5

Negotiate concessions and include this information in your settlement agreement. A common concession is the way in which a settlement is documented on your credit reports. Make your payment contingent on the debt collector agreeing to report the debt to the credit bureaus as "paid in full" instead of "settled." Set a deadline by which the report must be complete.

6

Instruct the attorney and the creditor to sign and date the settlement letter. Because the attorney prepared the document and acted on behalf of the creditor, who ultimately approved the final settlement offer, both signatures are necessary.