What Do I Do When a Collection Agency Won't Settle With Me?

Debt settlement serves as a staple of the collection industry. Each collection agency, however, employs different policies. Some collection agencies do not offer consumers debt settlement agreements on recently defaulted debts or debts that fall beneath a pre-set amount. Fortunately, you have options if a collection agency refuses to settle your unpaid debt.

Wait It Out

The older a debt is, the harder it becomes for debt collectors to recover it. If your original creditor recently charged off the account and sold it to a collection agency, the collection agency will typically attempt to collect the full amount from you before offering you a settlement. Thus, neglecting to pay off the account immediately works in your favor if you are hoping for a settlement. The amount of time you must wait, before the company provides you with a settlement offer, will vary depending on the collection agency's specific policies. While waiting for a settlement places you at greater risk of a lawsuit from the collection agency, a lawsuit is a collection agency's last resort. Most debt collection companies will offer you a debt settlement before filing a lawsuit against you.

Pay in Full

If you have the funds available to do so, paying the debt in full is a better option than accepting a settlement. While paying off collection accounts does not help your credit score, it does result in the collection agency reporting to the credit bureaus that you paid off the debt in full. The resulting "paid" notation looks much better to future creditors who review your credit files than if you had settled the debt.

Try Again

If you ask a debt collection agent for a settlement and he turns you down, call back and speak to a different representative. Because certain collection agencies pay their agents commission on the debts they collect, a debt collector is motivated to get you to pay as much as possible -- and can refuse to offer you a settlement even if doing so is not against company policy. By calling back and speaking with a different representative, you have a higher chance of getting the settlement offer you want. Calling back at the end of the month also increases your chances of receiving an acceptable settlement offer. Debt collector commissions are frequently tabulated on a monthly basis. Thus, if you can pay your settlement in a lump sum, a debt collector has greater incentive to agree to your proposal closer to the end of the month.

Negotiate for Concessions

Just because a collection agency refuses to settle a debt, it does not mean that the company will not negotiate other aspects of the debt with you. If you pay in full, you have much greater negotiating power. While each collection agency has different regulations in place regarding what aspects of consumer debts it will and will not negotiate, you can request that the company delete the collection account from your credit report in exchange for payment or eliminate any excess interest charges and fees your debt has incurred rather than reducing the balance you owe.