You may find this difficult to believe, but you actually have the advantage when negotiating with debt collectors. Simply put: you have something they want–your money. When negotiating a debt settlement, remember the old adage, if at first you don’t succeed, try, try again, and don’t get angry when they tell you no.
Their whole purpose is to get you emotional. If you are angry, upset, embarrassed or guilty, you will end up making an emotional decision that isn’t in your best interest.
It’s like a game to the debt collector. If they can push enough buttons, they can increase the amount they collect. To the person on the other end of the phone, it can mean a higher commission. But, trust me, they have an “accept no less than” amount. So your role in this game is to find out what that amount is and not pay a penny more than you have to.
So, where do you start?
Get all the facts
When you are contacted by a debt collector, or if you contact a debt collector, you want to stay very calm and get as much information about them as you can without giving them any information about yourself. Don’t even admit that you owe the money. Just find out as much as you can about the collection agency. Write down everything you find out, and be sure to also include the date and time of the call.
On your fact-finding mission, ask for the collector’s name and contact information, as well as the name and address of the collection agency. Be sure to ask who the original creditor was and the total amount due.
A legitimate collection agency won’t have any problem giving you this information.
Just remember, this is a one way street. You are getting information from them, not giving them information. The more information you give, the more ammunition they will have to use against you in future calls and letters. Trust me, they will use the information. If you even hint at feeling guilty, they will lay a guilt trip on you every time they call. If you tell them you are a Christian, they will quote Bible verses to you on why you should pay them the full amount due.
This is the basic information you need in order to start the negotiating process. Before you go any further, you’ll need to verify what you’ve been told.
Offer to settle for pennies on the dollar
Most bad debt companies buy old debts for a fraction of the total due on the account. Exactly how much depends on the type of account and the age of the account. Usually when your debt falls behind and your original creditor has called and sent letters and has been unsuccessful at collecting payment, they will either transfer your account to their own collection department, or they will charge off your account and sell it to a debt collection agency.
If that company fails to collect as well, your account may be sold once again. Yes, I know this from experience. The thing is, it’s unlikely to simply go away, and as long as you have that unsettled debt hanging around out there, you risk the chance of being sued.
But, there is a silver lining to that rain cloud. If a debt collector has purchased your account for a mere fraction of the amount due, what does this mean to you? It means you can negotiate a bargain. If your debt is $1,000, it’s likely that the collection agency paid somewhere around $70 for your account. Keeping this thought in mind, I recommend you start your offer at no more than 25%, and in most cases even less. The older your debt, the lower the offer should be.
Don’t look too eager, and know what your offer will be before you call. This should be money you have on hand now. Tax season is one of the best times to negotiate if you are used to getting a return. Just earmark that money as your “get out of debt fund” this year.
Even if it’s true, don’t ever say you need to settle the debt in order to buy something else. You’ll get no deal at all that way. If you owe $4,000 and you have $1,000 cash on hand that you are willing to spend to wipe out this debt, then simply say, “All I have is $1,000.” If they try to negotiate higher, simply repeat, “All I have is $1,000. Will you accept that as payment in full?”
What’s the worst that can happen? Your offer can be rejected. If it is, then thank the debt collector for his or her time, hang up, and make notes about your phone call.
Trust me, they will call again… and again… and again. Simply repeat your offer with each call. Stay calm, don’t give excuses or explanations. If you stay calm and firm, it’s likely they will accept your offer.
I originally published this article on EzineArticles. Article Source: http://EzineArticles.com/6169687