How To Negotiate With A Debt Collector      

how to negotiate with a debt collector

Don’t put up with harassment from collections agencies. Learn how to negotiate with a debt collector and save yourself thousands.

Millions of Americans are still under the impression that being in collections means you need to act urgently. Pressure and threats of legal action by collections agencies cause people to make rash decisions and write huge checks to companies they never heard of.

If you are in collections you need to know your rights. You need to understand the reality of the situation. The truth is, there has never been a better time to negotiate with a collections agency.

The entire country is in debt (if you haven’t noticed).

how to negotiate with a debt collector

Debt collections agencies are aware of this. They are buying debt cheaper than ever. Your credit card company sold your debt along with thousands of others for pennies on the dollar. There is no money in debt right now. And there is definitely no money for anyone if you refuse to pay or declare bankruptcy.

So you need to remember above all, you are in the better position. They are calling you already with the expectation that there will be a negotiation.

Based on years of expertise in the field and personal experience, this article will lay out how to most effectively negotiate with a debt collector.

What is the best way to negotiate a settlement with a debt collector?

First we will go over the steps everyone should take when fielding a collections call.

Then we will go through three scenarios on how to negotiate with a debt collector based on your financial situation:

  • How to negotiate with a debt collector when you have the money (how not to pay in full).
  • How to negotiate with a debt collector when you have SOME money.
  • How to negotiate with a debt collector when you have NO money.

No Matter your Financial Situation, The Following Precautions Need To Be Taken Before Negotiating Anything

  • Verify the collections agency.
  • Verify the debt belongs to you.

Verify The Company Calling You

Beware of scammers impersonating Microsoft with Windows 7 'support' – Ashcroft Cache Creek Journal

This cannot be stressed enough. Scammers and fake collections companies pop up everyday Just because you know you are in collections does not mean you are not being called by a scammer. In fact, having multiple debts in collection makes you a prime target.

Anyone can know your name and address. Do not take this as verification that the debt is yours.

Off the bat you need to ask who you’re speaking with.

Next get the name of the company, their phone number and physical address. Write this down.

Tell the representative that you need a few minutes to verify their legitimacy. Do a quick google search to confirm that the business you are speaking with exists. If it doesn’t, tell the representative you prefer a letter mailed to you as you can not confirm their legitimacy. Then hang up the phone. In our current climate of online scammers this action is completely acceptable.

Verify That It’s Your Debt

So the contact details match up, and your definitely speaking to a representative at an actual company.

how to negotiate with a debt collector

You still need to make sure the debt is yours. Debt collection agencies are notorious for being shady (shocking, I know). Sometimes even purposefully deceptive or pushy in an attempt to collect money for someone else’s debt.

If the debt belongs to you they should be able to provide the following details to you-

  • The type of credit card (Visa, Mastercard, AMEX, etc.)
  • How much the balance was when the debt was sold to them
  • The date that the debt was sold to them
  • The date of the last payment you made to the credit card company
  • The amount of the last payment you made to the credit card company

If they cannot provide this information than you are in your rights to request further verification through mail that the debt belongs to you.

Once You Have Verified The Debt Is Yours, Then You Can Begin To Negotiate 

Let’s say you had a Visa credit card that had a balance of $2,000 when you stopped making payments. 6 months later, after missed payments and interest the balance will likely be around $2,800.

This is the amount that the debt collection agency will say you owe.

They are trying to collect the EXACT same amount of debt that was sold to them. Which is why you need to know how to negotiate with a debt collector.

They know they won’t get that amount. You know it too. NEVER pay a debt collection agency the full amount. They purchased your debt from the credit card company for pennies on the dollar.

If Visa had given up on trying to collect from you, your $2,000 debt was likely sold for just over $500. At the most. That’s because they know the longer a debt goes unpaid, the less likely it is that it will ever be paid.

how to negotiate with a debt collector

Remember, they buy a lot of debt. They get it for cheap, but if someone doesn’t pay or files for bankruptcy than they take that loss.

So to make up for all the debt they buy that never gets collected, they aim to make 75%-100% profit off the debt that they can collect.

With that in mind lets go through the three negotiation strategies based on your current financial situation:

  • If You Have The Money To Pay
  • If You Have Some Money To Pay
  • If You Have No Money To Pay

If You Have The Money To Pay

First off, even if you have money to pay, do not reveal that. You still need to know how to negotiate with a debt collector or you will overpay.

The debt collector will tell you that you owe the full amount (we’ll stick with the example above) of $2,800.

Explain to the debt collector two things, tell them you had forgotten about that card and are shocked to see how high the balance is now. Then tell them Covid/Family Issues/Unemployment have put you in hard financial times (even if this is untrue).

Next you need to tell them you want to negotiate. If they refuse just ask to speak with a supervisor. They will then get on the phone and negotiate.

Debt Options

The debt collector will tell you that once a negotiation begins, a resolution needs to be reached by the end of the phone call. They are not bluffing about this part.

Make an offer of 50% of your balance minus the interest. So in our example of $2,800, you would offer $1,000.

This gives you a 50% discount while also reaching the profit threshold needed on the end of the debt collector.

The debt collector will put you on hold and speak to their supervisor.

Before long they will come back and say they will accept the offer of 50% of the balance under the stipulation that it is paid in full in a one time payment.

This is normal and is the ONLY way that you will get an offer as low as 50% of your balance while also avoiding the interest accrued.

Next the debt collector will take your checking account information. Be sure to take down the name of the rep, their phone number, and the amount to be paid.

Request a confirmation email of the deal that was reached. And that the debt will be cleared once the agreed upon amount is paid.

Once the money is out of your bank account request another email confirming the debt is now clear. Do not stop contacting them until you receive this e-mail.

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If You Have SOME Money To Pay

If you don’t have the money to pay 50% of the balance in one payment, you will have to negotiate a higher amount to be paid in increments.

For example you can make offers like the ones below (sticking to the same example of a $2,800 bill)-

  • $1,200 over two monthly payments of $600
  • $1,400 over four monthly payments of $667

Essentially the longer you need to pay, the larger the settled amount will be.

If You Have NO Money To Pay

how to negotiate with a debt collector

As mentioned above, do not avoid their calls. Take their calls and be honest about your situation.

Sometimes people who tell honest stories about why they can’t pay/what they could afford to pay get the best deals of all.

You have to remember that they know you are in collections. They know they are calling someone in a bad financial spot and that getting the full amount is highly unlikely. They don’t know that you know how to negotiate with a debt collector.

If you have no money at all to offer any payment, you will have to push things off somehow. There are a few ways to do this.
  • Go into a sob story about being unemployed, financially stuck, you just need more time, etc. Essentially you are trying to establish that you acknowledge the debt, you are not hiding from it, you just do not have the money to pay for it right now. More times than not they will accept this for a few months as long as you keep communication with them.


  • Mention that friends have suggested filing for bankruptcy. Do NOT say that you are filing, just that you are considering it. This is worst case scenario for the debt collector and may cause them to reel back and consider giving you another month to figure things out.


  • If nothing else works, tell them you will reach out to friends and family to see if they can give you a loan. Again this is just to buy more time. Ask the collections agency to not seek legal recourse in the meantime (they will agree to this as long as you keep communication, they don’t want legal recourse either, it will likely end up costing them money).

Other Tips On How To Negotiate With A Debt Collector

  • Get the settlement agreement AND confirmation when paid in full in writing.
  • Lightly mention you have considered bankruptcy.
  • Do NOT ignore their phone calls, this is pretty much the only way to end up causing legal recourse.
  • Remain calm with the agent but assertive, let them know you understand that they purchased your debt for much less than what they are asking for.
  • Learn the rights in your state. You may be able to demand they stop calling family members/sending mail.
  • Stay positive! Your financial situation is temporary. Remember that.


Federal Trade Commission 

Credit Karma

Consumer Finance

U.S. News

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