How to Negotiate With Third-Party Credit Card Debt Collectors

Credit cards are a part of daily life. Consumers use them for minor purchases, such as groceries, dining out and movie rentals. They also use them for larger purchases like vacations, airline tickets and Christmas gifts. The downside is that credit card usage can lead to unmanageable debt. If a consumer fails to pay a credit card debt, the creditor may turn that debt over to a third-party collection agency.

Instructions

1

Write a Debt Validation (DV) letter. Under the Fair Debt Collections Practices Act (FDCPA), bill collectors are required to prove that you actually owe the debt. By law, you must request validation within 30 days of receiving the initial collection notice.

2

Mail the DV request to the collection agency via certified mail return receipt requested. Save your postal receipts in case you need to prove that the debt collector actually received your request.

3

Wait to receive the DV materials, which may include copies of sales receipts, statements from the original creditor or a signed contract. The agency must cease collection efforts until they provide you with validation. Collectors who are operating illegally may stop collection efforts at this stage. Legitimate agencies are usually willing to negotiate.

4

Review any materials sent to you and decide how much you owe in total. Decide on an amount that you are able to pay towards the debt, either in a lump-sum payment to settle the debt in full, or in installment payments.

5

Send your written offer to the collection agency by certified mail, return receipt requested. Leave room to negotiate. If you are able to pay $800 of a $1,000 credit card bill, then initially offer $300. The agency may accept your offer outright, thereby saving you $500, or they will make a counteroffer. If you need to make payment arrangements, clearly indicate the amount you can pay each month.

6

Wait to hear back from the agency, either in writing or by phone. If someone from the agency phones you and makes an acceptable offer, request a letter confirming the deal. Never make any payments over the phone. Until you have confirmation in writing, the settlement terms are not valid ,since the collection agency can renege.

7

Send payment to the collection agency once you have a written agreement in hand. Make payment by cashiers check or U.S. Postal money order. Do not send a personal check. Repeat this process for each of your credit card debts.