How to Negotiate Credit Card Debt From Debt Collectors

Debt collectors usually earn commissions for collecting delinquent credit card debt. The more they collect, the more they earn and that is why they attempt to collect so aggressively with phone calls day and night. People who owe credit card debt can use the aggressiveness to their advantage by entering into negotiations with debt collectors. Some debtors are tempted to ignore the debt collectors, while a better strategy is often to take the collector's calls and strike a deal you can afford.

Instructions

1

Read the Fair Debt Collections Practices Act to understand your rights under the federal law. Knowing what the debt collector can and cannot do as he attempts to collect could make you less afraid of the debt collections process and increase your confidence for entering into negotiations. By law, debt collectors cannot threaten you with bodily harm, take your bank account without a court order, or tell your employee about your financial problems. Many other protections exist as well. Not being afraid of debt collectors is one of the most important steps in being able to negotiate credit card debt with confidence.

2

Review letters from the debt collector to determine how much you owe. Save 35 percent of the total as you prepare to enter negotiations. The Wall Street Journal's SmartMoney.com reports that many debt collectors will accept 20 to 70 percent of the balance to pay off delinquent credit card debts.

3

Call the debt collector. Tell the collector that you have some extra money in your budget this month and you are trying to pay off a few credit cards. Offer the debt collector 20 percent of the balance on the account. Raise your offer to 30 percent if the debt collector balks. Focus only on the offer. Do not discuss your overall financial situation, your assets or when you might have more money.

4

Send a letter to the debt collector the next day if he refuses to accept 30 percent. In the letter explain that you can increase the offer to 35 percent of the total but that's it. Ask the debt collector to call you within seven days to accept the offer or you will use the money on another debt.

5

Apply the money to another debt using the same tactics if the first debt collector continues to balk. Or put the money away and contact the original debt collector once each month offering 35 percent of the total. Stay in touch monthly until you have a deal.