Negotiating A Settlement with a CA

In my opinion, hardly anything can be accomplished with a debt collector by mail. They just are not geared to negotiate by mail and 99% will simply refuse.

I know that lots of posters on this forum repeat the mantra "STAY OFF THE PHONE - NEVER TALK TO A DEBT COLLECTOR". I agree with that for the most part especially if they catch you off guard. The reality is though, in order to negotiate a settlement, the phone is an excellent tool.

Now, in fairness, collectors are trained to talk on the phone -- you are not. But, this is not brain surgery. All you need is a plan that will allow you to control the conversation.

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How to negotiate a settlement:

1. Plan your call and set your goals before calling. Set your goals for the communication prior to beginning the conversation. What do you what to accomplish? If you want a payment plan, the collector is going to need to know your financial info to be able to justify it to his boss. If you want a settlement, the collector will have to know why one is justified.

When you have your goal for the conversation in mind, you can anticipate what the collector will want to know or ask. This will allow you to steer the conversation and guide it toward what you want. If the collector calls and you aren't ready – tell him that you need a minute and pull your thoughts together.

2. Organize Your Thoughts. You know what your goal is. Ex: You want to settle for 50%, start negotiations @ 25%. Now, set up a logical progression for the call. Keep the conversations moving toward your’ goal. Don't introduce distractions and don't follow the side path the collector will layout for you. But above all remember, if you don't know what you are going to say, you probably won't say what you want.

3. Make no solid agreement on your first phone call.

4. Talk to the collector. That doesn't mean allow them to berate, insult or harass you. If you are being mistreated on the phone, tell them how you are feeling and if they don't change their tune – END the call. However, that also means don't threaten, insult or yell at the collector either. If the conversation goes bad – just hang up. An argument will not help you.

That said, if the collector doesn't know your situation, he can't go to bat for you with his manager (collectors have very little authority to make a deal and anything significant you are asking for will require higher approval -- perhaps several levels higher). And if you don't communicate well, he won't. You need to provide the supporting information for the goal you set in step one. If you can only pay $25 a month, you will have to justify that to the collector. If you can't make it sound reasonable, it isn't going fly. But remember, the collector works on commission. If you make the payment plan reasonable and support your goal with facts and figures regarding your economic position, he will likely take the deal and move on to the next account.


5. Make sure you have the money to pay an agreed settlement immediately

6. Sit at a table with a notepad. Take notes of everything being said. (The collector will I promise you). If you are able, record the conversation. If you are in a 2 party state, you will need to inform the other party of the recording.

7. When you are talking to the collector, describe where the funds to settle is coming from (for example, the money you will be paying this is with is being given to you by your wife's uncle or something like that -- he has offered you $x - with x being your starting point in the negotiations).

8. Remember X is all the money you have to work with on this call. If the negotiation goes higher and you hit your goal tell them you have to have it in writing so you can bring it to your uncle and ask for more.

9. Make no promise to pay without the written settlement agreement. Don't pay or make a promise to pay on the first call.

10. Remember you are dealing with trained negotiators. If the collector becomes excited or you feel is getting abusive simply say, "Obviously we both want to take care of this, but I feel you and I aren't communicating well. May please speak with your supervisor?"


11. Relax. Inhale. You have just been through a stressful situation. And, it is the collector's job to make it a more stressful if you aren't paying. After you hang up with the collector don't talk to your family for at least 10 minutes. Just pause and remember, nobody is going to die over this. While it is important, don't let a debt destroy your relationship with your family. You will not get the result you wanted in one call – most times


12. It will take more than one call to do this right. You will need to take copious notes and make sure you get the names of who you talk to.

13. If you are concerned that you will not be able to handle the negotiation yourself, there are professional negotiators -- just stay away from the internet settlement companies unless you enjoy putting all your money in a pile and setting it on fire. An ethical settlement professional will work for a percentage of what they save you and will not want any money in advance of results that satisfy you.

Keep track of your calls, who you talked to and about what. You cannot take too many notes while you are opening the lines of communication and negotiating a debt.


A final thought. As I said above, the collector you get on the phone has virtually no authority. Sometimes, he is constrained by factors beyond his control (limits imposed by the original creditor or by the business plan of the CA). If after going through the above steps and the collector says "no", don't automatically assume he is playing with you. Wait two weeks and try again. It that does not work try again during the last 2 or 3 days of a month on the end of a calendar quarter when goals and commissions become intense motivators for the collector and the CA.

If, after working your plan through several cycles without results, then perhaps you re-evaluate or give up. Sometimes it is just a bridge too far for reasons beyond your control.

Great info and good detailing, Nascar!

Great info. I generally say give them a maximum of 5 minutes phone time or until they become abusive. After the 5 minutes hang up and try another day. If they call you tell them to send the offer in the mail or don't bother calling and hang up unless you are fully prepared to negotiate.

THis is good stuff Thanks!

Thanks for the great post nascardevil!

Thanks so much for this post. I was getting ready to settle with my CAs when I read this post. I think I'm more ready now Thanks again!

I wish I had read this 2 years ago ... good stuff!

Great post!

However, my own little success story, I was able to settle with one of my JDB's via mail for a $12k balance for 60% in 36 payments! They emailed me the settlement agreement and in the agreement, they also agreed to delete it from the credit reports once it was paid off AND with the settlement agreement, the interest has stopped accruing. what a deal!

I am just glad that I didnt have to talk to them.

Good info, however, I prefer everything in writing. Now, if I was lucky enough to be involved in DC's which were honest (haha) and half way decent maybe, but I haven't had the good fortune of encountering one, yet.

Guest,

First of all (I'm new to this) what is a JDB? I like the thought of settling my credit cards for 60% over the next 36 months, which I think my creditors might go for because I haven't paid them in several months now and I'm getting very nervous about what they might do next. I'm scared to death to talk with them because I don't want them to get nasty with me. Did you initiate the arrangements with your creditors or were they calling you? Can you send me your letter that you used to make these arrangements. I would like to give it a try. Did you request that they delete it from your credit reports once it was paid off and that the interest stopped accruing?

I have had lots of luck through this forum with my payday loans, I'm moving on to my credit cards. I really would prefer to not have to go through the debt settlement company and pay the fees. Any assistance would be greatly appreciated!

JDB = Junk Debt Buyer

Are the junk debt buyers easier to deal with than the CA's or OC's?

The tips were for dealing with CA's and JDB's, not so much the original creditor. Depending on whether or not you are w/in SOL and how close reporting period is to expiring, JDB's are easier to deal with IMHO. If the CA is working for the JDB, they are given a guideline for settlement but they still have to have it approved by the owner of the debt. If you can go straight to the JDB to negotiate, you eliminate the middleman. Since they paid a small percentage for the debt complared to the actual amount, you can generally get them down to 25-35%. They are still making a good profit from that. Just remember that if you are still w/in SOL, it may be best to let sleeping dogs lie. If there are still several years of reporting period remaining, the JDB still has the upper hand because they can continue to report. YMMV

Nascar, you are the best! Thanks for taking your time and writing this post!

I am in the process of trying to get some rhyme and reason to my debt. I paid off two and I have 5 left. I want to tackle three more before the end of the month.

I spoke too most of them in the past couple of weeks but i think i will wait till the last week of the month and try to pay them off.

However, it is so hard to get them to mail me something. They want the money right then and there! LOL, i know i haven't made a payment in over 4 years but can i get a statement. They laugh when I tell them i need it in writing because i want a paper trail! How rude.

Some offer to fax me something? Is that legit? I don't have a fax machine and I asked them to email but they say that is illegal.....

However, OMNI (the CA of my macy's account) emailed me my information.

I don't think it is illegal to email anything. They could actually email you a signed agreement even as a PDF or something.

NASCARDEVIL..............good stuff here!! Gosh!! Sometimes I feel so 'disorganized' when it comes to debt issues, I don't know where to start. I've gotten a few 'Settlement Offers' in the mail, about past accounts and credit cards. Should I NOT call until I have the money in hand....what they are asking for? What should I do? Settle for what I CAN afford, instead of what they are asking?