10 Tips For Negotiating With Creditors

10 Tips For Negotiating With Creditors

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Advertiser DisclosureOctober 26, 2018 by Gerri Detweiler

Negotiating with Creditors

Article originally published May 5th, 2017. Updated October 26th, 2018.

If a debt collector or creditor is calling about a balance you can’t pay in full, the last thing you probably want to do is talk with them. But here’s one reason to pick up the phone: you may find the creditor or collector is willing to negotiate.

Debt collectors tend to buy debts for pennies on the dollar, which means they don’t need to recoup the full amount you owe to reap a profit. As such, there’s a chance one will agree to a settlement. Creditors, too, may be good with reaching an agreement, since the alternative is to write the debt off as a loss.

Of course, there are some best practices when it comes to debt negotiation, including explaining your current money situation, taking notes, and obtaining written confirmation of any settlement you do reach.

Here are ten full tips for negotiating with creditors and collection agencies.

1. Stick to Your Story

The person on the other end of the phone doesn’t want to hear all the details about why you’re not able to pay your bills. However, they do need to know if you are in a hardship situation and what you are trying to do to get back on track.

It’s helpful to come up with a few sentences that you can use consistently when you talk with creditors.

These sentences could include:

  • “I was very ill, out of work for two months, and now I am trying to get caught up.”
  • “My wife was laid off, and I’ve taken a significant cut in pay. She’s looking for a job so we can catch up, but we don’t have any money to pay right now.”
  • “My interest rates have doubled, and I can no longer keep up. I am meeting with a bankruptcy attorney to see whether I should file.”

Be truthful! If you tell everyone a different story, especially one that’s not true, it’s bound to backfire.

2. Avoid Drama

Try to stay calm, no matter what the person on the other end of the line says. You’ll get nowhere if you lose your temper. If you find yourself losing your cool, just tell the collector you’ll have to talk with them later and hang up. If you need to talk with that representative again, tell them you’d like to record the conversation. That usually keeps them on their best behavior.

3. Ask Questions

If a collector says you’ll be sued, or that you’ll lose property if you don’t pay, just calmly ask for specifics: “When can I expect to be notified of this lawsuit?” Or “When will you take the money from my bank account?” Some of these threats may be illegal, and the more information you have, the better.

4. Take Notes

Have a pen and paper handy, so you can take written notes whenever you talk with a collector. Write down the name of the person you talked to, when you talked, and what was discussed. Not only can this help you take the emotion out of the situation, but you’ll also have a record if the creditor or collector broke the law in their attempts to collect.

5. Read (& Save) Your Mail

Don’t throw away mail from your creditors or stuff it in a drawer. Open it, read it, and save it in a file.

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