Tips for Negotiating with Debt Collectors – Part 2

Negotiating with debt collectors isn’t as difficult as you may think. Especially when you realize that you have the advantage. After all, you have what they want–your money. But, making a debt settlement offer isn’t the end of your negotiations. What’s the next step? Ask your debt collector to sweeten the pot by doing you a favor.

Negotiate your credit rating with the creditor

Before you pay anything on this account (which should be done by certified check never by payment over the phone!) ask that any negative report be deleted from your credit record. Your creditors can report your payment history, but they aren’t required to do so. They can also change it or delete it altogether. That’s why this works.

It doesn’t cost the debt collection agency anything except a little bit of time to have your account history removed from your credit report. But, they won’t do it unless they are asked, and they will usually try to get out of doing it if they can.

But, remember you have something they want, and an account that has gone to collections and been paid is just as damaging to your credit as a charge off or an uncollected debt. And, it will stay on your record for as long as 7 years. In fact, it’s just about as damaging to your credit as a bankruptcy.

So, if your credit rating is important to you–especially if you are planning to make a large purchase at any time in the next 7 years or so–don’t forget this important step in the negotiating process.

The debt collector may claim they can’t make that happen. Again, remain calm but firm, and be a broken record: “All I have is $1,000, but before I send it to you, I need your agreement that you will accept that as payment in full and delete this record from my credit report.”

Now, you might not care about your credit rating. If you subscribe to the Dave Ramsey philosophy, your only concern will be getting out of debt, not trying to improve your credit. If you think about it, the only reason you need good credit is if you are planning to go into debt. But, there are some “good” debts as well as “bad” debts. A home loan, for example, is a good debt. And your credit score will definitely affect what kind of interest rate you can get on a home loan.

Even if you already own your home and don’t plan to buy anything else on credit as long as you live, it can’t hurt to clean up your credit report, so you may as well ask that this be part of the debt settlement agreement.

Learning to negotiate with debt collectors can save you thousands of dollars on your current debt as well as any future loans you take on. Why? Because your credit score affects your interest rate. But, there is another tip I’d like to share with you, and it just may be the most important one yet.

If it isn’t in writing, it didn’t happen

Many people make this mistake. You can negotiate the best deal in the world. The debt collector may agree to everything you’ve asked. But if you overlook this important step, you may find yourself still in debt after sending off what you thought would be your final payment. You can even still be sued for the balance due on the account, plus interest and legal fees.

You simply can’t afford to get into a “he said, she said” situation with a debt collector. Before you pay them the amount you’ve agreed to, insist that they send you the entire agreement in writing. This document should state the amount agreed to, that it is payment in full, that they will not resell the unpaid portion of your debt to someone else, and that they will remove any negative marks from your credit report.

I actually made this mistake when I negotiated with one of my creditors. I was lucky. They only defaulted on a very small portion of our agreement, and I was even able to fight that–and win!–by filing a complaint online through the State Attorney General’s Office. But, don’t count on being lucky. Insist that you will only send payment after you receive a written agreement.

Once you have it in writing, then you have a deal. Send a cashiers check for the agreed amount along with a copy of the written agreement. Then follow-up to make sure they keep their end of the deal and remove all mention of the debt from your credit report. If not, then you can have the negative remark removed by contacting the credit bureaus and providing them with a copy of the written agreement.

When negotiating with debt collectors, always remember that they don’t expect to collect the full amount. Many times, they don’t expect to collect at all. Yes, it’s true that you could possibly be sued for payment. But 99 times out of 100, a debt collector is going to go for the deal instead of the law suit. It’s easier, less time-consuming, and less expensive for them. And, of course, it will get you out of debt faster and cheaper!

I originally published this article on EzineArticles. Article Source: http://EzineArticles.com/6169857

 

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