Negotiating with Creditors and Debt Collectors: Keeping Your Cool

Many of us can barely make it through ordering a pizza over the phone, let alone negotiate with debt collectors or creditors. But, that day may come, and you best be ready. There may be at least one upside to the dreaded phone call – they are willing to negotiate. That is why we present below the best tips for negotiating with creditors and debt collectors.

There are slight differences in how you can approach creditors and debt collectors. But overall, both can be persuaded into an agreement. Creditors are often willing to come to a deal with individuals because their only other option is to write the debt off as a loss. Meanwhile, debt collectors don’t need to squeeze out of you the whole amount you own to reap a profit. So some of the debt collectors will accept a settlement.

Thus, before we move to general advice for debt negotiation, here are some valuable nuances about negotiating with creditors vs. negotiating with debt collectors.

Negotiating with Creditors

When you begin negotiating with a creditor, imagine yourself at a busy flea market. Your goal should be to attempt and settle the debt for 50% or less. So, if you owe $2000, aim for the $1000 mark. But as we have said, frame it as a flea market situation. Begin your negotiation by first offering to pay a sum far less than 50%, which will give both sides room to negotiate and reach an agreeable amount.

Let your creditor know that you do have some money put aside for the agreement to get an edge in the conversation. If you do enter a payment plan, make sure the creditor tells you if they will reduce the interest rate on your debt. And, as always, stay calm and keep a written record of your negotiation.

Remember that creditors don’t usually go for debt settlement unless you are really behind your payments.

Negotiating with Debt Collectors

Sometimes creditors hand over their cases to debt collectors. These financial players profit by collecting past due dates that have originated with a creditor.

Debt collectors can be more stubborn, so it may take several tries to score the kind of settlement you’re okay with. Collectors are expert negotiators, so avoid their attempts to lure you into a settlement that doesn’t have your best interest at its core.

And finally, ask if you can opt for a payment plan. Again, let them know that you have some money set aside for this purpose and that a single lump-sum payment won’t do much to ease your financial burden.

Strategies for Negotiating with Creditors and Debt Collectors

Here are the best ways to keep your cool and get the best settlement for your needs when negotiating with collection agencies and creditors.

Avoid Drama

No matter what the creditor or debt collector says, stay calm. Losing your temper will get you nowhere. Whatmore, it may even lead them to see you as ‘difficult’ and someone with whom they can’t negotiate at all.

If you find yourself losing it (understandable – it is your financial future we’re talking about), tell the person on the other side of the phone that you will have to get back to them and hang up.

One trick that can keep them in check and lessens the chance of them ticking you off is when you say you will record the conversation. That move usually keeps creditors and debt collectors in check.

Ask Good Questions

If a collector says they will sue you, just calmly ask for the specifics. For instance, ask when you can expect to be notified of the lawsuit. Or ask them, “When will you take the money from my account?” Don’t be shy to do so. They often make many empty, illegal threats, so the more informed you are, the better.

Take Notes

Have a pen and paper ready. Write down the name of the person you talked to, when you talked, and what the topic was.

Doing this will remove the emotion from the conversation. It will also protect you if they break any laws while trying to collect the money from you.

Consult an Expert Beforehand

Getting ready for these conversations can be like a proper battle prep. But you can never be too prepared. There are credit experts who can assess your financial situation and advise you on talking with creditors and debt collectors. White, Jacobs and Associates is always at hand to offer tips, especially through a free consultation that you can already book today.