Dealing with collection companies can be intimidating and irritating, especially when you want to repay or negotiate a settlement. Understand that a collection company has purchased the original debt from your creditor, most often at a significant discount. By proposing a settlement you can have the debt paid quickly and generally for less than the original amount.

The collection company is motivated by getting the consumer to pay as much money as possible with the least amount of effort on their part. The collection representative works on commission and they receive a portion of whatever you pay. Armed with this information, and your Fair Debt Collections Practices Act rights, you can fight back against aggressive tactics and possible pay substantially less to clear your records.

Consider these tips when offering settlements:

  1. Don’t be afraid to get outside assistance if you need or want it
  2. You will most likely be told no to any request less than what the collection company wants, so ask to speak to a supervisor. Don’t give up!
  3. Most collection representatives work on commission. They have a financial incentive in getting you to pay as much money as possible upfront and as quickly as possible. Use this information to your advantage when trying to negotiate a lump sum settlement.
  4. In your negotiation ask the creditor to remove any negative credit history from your credit report. Although they will most likely say no, or they can’t do this “by law”, they do have the ability to remove information from your credit report. This is HUGE in cleaning up your credit report but can be very difficult. Don’t give up!
  5. Adopt a plan and stick to it. If you owe $1,100 but can’t afford to pay more than $600, don’t agree to pay more.
  6. Try to identify the creditor’s bottom line. For example, if a bank offers to waive two months’ interest if you pay the principal due on your loan, perhaps the bank will actually waive three or four months of interest. If you need, push it.
  7. Don’t split the difference. If you offer a low amount to settle a debt and the creditor proposes that you split the difference between a higher demand and your offer, don’t agree to it. Treat the split-the-difference as a new top and propose an amount between that and your original offer.
  8. Don’t be intimated by your creditors. If they think you can pay $100, they will insist that $100 is the lowest amount they can accept. Don’t believe them. It’s fine to hang up and call back a day later. Some of the best negotiations may take weeks.

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