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10 Tips for Negotiating with Collection Agencies, Bill Collectors and Debt Collectors
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When you negotiate with a debt collector you are going up against a tough and seasoned professional. Following these tips can help take the advantage away from them and put it on your side.
The first thing you need to do is to educate yourself on what your rights are. Your first assignment would be to learn about the Fair Debt Collection Practices Act. You can also get a free brochure on the rules of debt collection from the National Consumer Law Center. If you call 617-542-9595 and ask for the brochure “What You Should Know About Debt Collection”, they will mail you one. You may also want to contact your states attorney General to see what the rules are in your state. There are things that a debt collector can and cannot do. Just because you owe them money doesn’t mean that they can harass you mercilessly. When you know what your rights are and you emphasize to the debt collector that you know what your rights are, they are less likely to use aggressive collection tactics.
1. Your first step is to prioritize your bills. No matter what the credit or debt collector says, the most important thing is to provide for your families necessities. It is silly to put yourself in a position that you can’t pay for your basic living expenses.
2. Calculate how much you can afford to pay and pay less. I would never promise to do anything you cannot do. Do not send post dated checks or agree to electronic payments from your bank account. Once they have your payment information, it could be tough to manage that the debt collector will have integrity on taking payments at the correct time.
3. If you think telling them the circumstances that had you be in the position that you are in will make a difference, they will not. They really don’t care. They really don’t have any sympathy; they hear the hard luck stories all day long. They just want their money.
4. Absolutely do not give them any personal information. Telling them where you live and work could be a big no no. Keep in mind they only care about one thing, getting money out of you. They will have no problem contacting you wherever they know that they can find you. Just stick to whatever the facts are concerning your case.
5. Always keep your cool. Bill collectors make their living by rattling your cage or putting fear into you. That is how they can get people to come up with the money. The truth is that there is not much they can do until the have a court order or judgment against you.
6. If you are able, tape you phone conversations do so. Most likely they will get out of line at some point. You can then use this as leverage against them. They don’t want any trouble with state or federal agencies.
7. Take good notes. Keep all your collection letters and keep good notes on all of the calls that you receive. You may want to keep a dedicated log book by your phone. Keep the date, time and the person you spoke with. Also keep detailed notes about what the conversation was about.
8. Get all proof of payments in writing. I would even suggest sending them a personal check with a release written on the back of it. So even if they do not send you anything, you have a cancelled check documenting that they have released the debt. I would write something like, “By endorsing and depositing this check, said creditor fully releases and discharges said person from any future claims regarding this debt and the debt is paid in full.” This would work fine. I believe that it is always smart to have a back up plan.
9. Also be sure that they update your credit profile as part of the agreement
10. Most collectors are paid at the end of the month. You might want to consider doing the negotiation at the end of the month. This is the best time of the month to negotiate the best deal.
It is true that owing money can be no fun, but it does not need to ruin your life. It’s just money. If you are in debt the road to getting out of debt can be daunting. The sooner you start the soon you can be debt free. I always loved this saying, “how do you eat an elephant? One bit at a time”. It is a cute metaphor but very appropriate for paying off debt.
Dave Mason has been in the Real Estate and Finance industry for nearly 18 years. He has a degree in Finance and Real Estate from the University of Arizona
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