How to Negotiate With a Collection Agency

Debt-collection agencies can strike fear into the hearts of consumers, but you shouldn't be afraid to negotiate with them. If you know your rights, remain calm and go into the negotiation process with reasonable expectations, you might be surprised at how willing the agency is to work with you. You may even be able to settle the debt for less than you owe and preserve your credit history in the process.

Instructions

1

Review your budget and figure out the maximum amount you can pay monthly to reduce the debt.

2

Learn your rights when it comes to debt collection. The federal Fair Debt Collection Act outlines what you can and cannot do, as well as how the collection agency can operate and communicate with you (see Resources).

3

Call the collection agent when you can be focused and calm. Tell him how much money you can afford to pay, either in a lump sum or through monthly payments. Be polite but firm in communicating what you are able to pay. If you start to get emotional during the conversation, get off the phone and call back once you have calmed down. Do not give out personal information, and never give the collection agent your banking information.

4

Keep a detailed, written log of every call. Record the date and time, along with the name of the person you talk to and her contact information. Summarize the details of the call, including any offers that are made.

5

Get every offer or settlement plan in writing, and send all your correspondence via certified mail. Do not agree to a "one time only" offer that must be paid that day over the phone. See the offer in writing first.

6

If you're able to negotiate a payment plan, insist that the debt be reported as "paid in full" rather than "paid in settlement" on your credit report. You can use this as a concession in negotiating the amount of your payment, with the understanding that it will affect your credit report.