How to Make an Offer to a Debt Collector

A debt collector's goal is always to collect the full amount of a debt. However, collectors realize that is not always possible and are usually willing to negotiate. Just as a debt collector wants to collect as much as possible, a debtor should seek to pay as little as possible. By the time a debt collector takes on a debt, damage is already done to the debtor's credit report because of late payments, and other notations on credit reports such as charge-offs and collection accounts. Paying the debt in full usually won't erase the damage, and that's one incentive for trying to resolve the debt for less than the full balance -- a process called debt settlement.

Instructions

1

Review correspondence from the debt collector to determine the amount due. Then judge how much you can afford to pay in a lump sum to settle the debt. The Wall Street Journal's SmartMoney writer Aleksandra Todorova reports that debt collectors will often accept 20 to 70 percent of the balance for unsecured debt such as credit cards. Prepare to make an initial offer of 20 percent by doing the math in advance.

2

Call the debt collector. Control the conversation by making a specific offer while not answering any questions about your employment or assets. Tell the debt collector you have a small amount of money to settle the debt immediately. Tell the debt collector how much you are willing to pay.

3

Increase your offer to about 35 percent of the debt if the debt collector balks at 20 percent. Politely end the conversation if you cannot strike a deal at 35 percent.

4

Follow up with a letter in writing asking the debt collector to reconsider your offer if you weren't able to reach a deal. Tell the debt collector that if you don't hear back from him within 10 days you will offer the money to another debt collector for a separate debt.

5

Contact the debt collector each month for more negotiations until you have a deal. Each time tell the debt collector you're looking to settle a debt and will take the offer to another debt collector if necessary. Once the debt collector accepts, ask for terms of the deal in writing. Review the agreement after receiving it and then make payment by mail using a cashier's check.