Getting Collection Agencies To Settle For Less PDF Print E-mail
Written by Mark Andrade   
Saturday, 31 July 2010 17:05
Trying to collect payment on debts sent to collection can quickly become counterproductive because of the costs involved. Once the costs start adding up, collection agencies who initially insisted on full payment, quickly become more open to negotiation - especially since the alternative is to simply write off the debt When this happens, you may be in a position to bargain for a lower payoff on your debt.
by MarkAndrade


Trying to collect payment on debts sent to collection can quickly become counterproductive because of the costs involved. Once the costs start adding up, collection agencies who initially insisted on full payment, quickly become more open to negotiation - especially since the alternative is to simply write off the debt When this happens, you may be in a position to bargain for a lower payoff on your debt.

Collection agencies are often satisfied to settle your debt for whatever you can offer them. The reason being, they usually only get to keep a percentage of what's collected. To maximize their overall return, they need to collect as much as they can, as fast as they can. Since their motivation is to get matters settled as quickly as possible, negotiating a lump sum payment, rather than installments, will go over much better.

Understand that the collection agency will always try to get more than you are offering, so be prepared to bargain. Make your initial offer in the range of 40% of your original debt and see what they counter with. Your bargaining power is greatest prior to payment, so negotiate the removal of related negative data from your credit report at the same time, maybe in lieu of a slightly higher payoff.

Whether it be a lump sum or a series of payments, only offer what you can actually afford. You need this matter to be put to rest as much as the collection agency, and you don't need to further exacerbate your financial problems. Also, keep the source of your funds confidential. Collectors push for higher payoffs if they believe you have friends or family willing to help you out.

Get your final agreement in writing, along with a confirmation letter that the settlement satisfies your entire debt and that the debt will be stricken from your credit report. Make payment either by cashier's check or money order directly to the collection agency, unless instructed otherwise in writing. Get a signed receipt if you make cash payment, and keep all documentation for at least four years.

Many people don't know that it's possible to settle with a collection agency for less than they owe. With this new-found knowledge you can negotiate a better than expected outcome when settling your debts. A little initiative and courage can get you on the road to a better financial future and better credit score.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

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