Can You Negotiate With a Collection Agency?

Debt collectors are in the business of making money quickly. You can negotiate with a collection agency and most other creditors. Amounts owed, the age of your delinquency and your offer all factor into an agreeable outcome, but successful negotiations ultimately depend on a creditor's willingness to bargain. As with any contract, get it in writing and retain proof of the agreement.

Collection Departments and Agencies

Dependent on company policy, the early stages of debt collection generally involve an in-house collection department. If the account becomes seriously delinquent, the creditor may use an outside collection agency. If the lender believes the account is beyond collection, the entire account may be sold to a debt buying company. These companies are collection agencies that buy delinquent accounts for less than the total amount owed and then seek payment from the original debtor.

Preparing for Negotiation

Do not negotiate with a collection agency without creating a budget. Go over you finances and allocate money to where you need it most before making an offer. Your home, utilities, food, insurance and any other necessities come first. Calculate exactly how much you can afford to pay and how often you can afford to pay it. Never offer or agree to more than you can afford just to stop collection attempts. Additionally, request proof of your liability, amounts owed and the original creditor's name. Collection agencies must provide verification of the debt upon request.

Negotiating

Many collection agencies prefer lump sum payments to installment plans. Wisconsin consumer protection attorney Mary Fons tells Bankrate.com that she often advises consumers to begin negotiations by offering debt collectors 10 percent of the requested amount. Generally, debt collectors counteroffer very low bids. With lump sum bargaining, start negotiations well below what you are able to pay and increase your offer in small increments. If you're unable to make a lump sum payment, request a repayment plan. Offer less than you're able to pay each month and gradually increase the amount as negotiations continue. Once you hit your allowable budget, stay firm.

Concerns

Get the plan in writing before making a payment. You may send the agency a certified letter detailing agreement terms with your first payment. Stipulate that accepting the payment or cashing the check constitutes acceptance of the plan. Retain a copy of the notice and the mailing receipt. Don't skip payments as failure to pay may result in further collections and legal action. Keep proof of payments, attempts to negotiate and agreements. If a collection agency does sue, providing the court with proof of your attempts to negotiate helps your defense.