"I frequently advise people to start with
10 percent of what's being asked and see what happens," Fons
says. "Sometimes, they're glad to get anything."
Always start by offering less than you can afford.
And then sit tight.
"Say 30 cents on the dollar. And they'll
say 75 cents on the dollar," Detweiler says. "Just wait."
Use the power of silence. Don't say anything
except maybe "hmm."
"Let them budge, not you," Detweiler
says.
"It's really important consumers get confirmation
in writing," says Bob Hobbs, deputy director and attorney at
the National Consumer Law Center. "Otherwise, they'll have
trouble making the deal stick."
If you expect a debt collector to hash out
a new payment agreement in writing, you could be waiting awhile.
And there's another risk -- a debt collector could change the terms
on you.
"They'll call and ask for something different.
They'll put stuff in writing that you didn't agree to," Fons
says. "You might as well write it yourself and get them to
agree to it."
Stipulate the terms
Send a letter to the debt collector outlining the payment agreement.
You'll want to send it via certified mail so you'll receive a receipt
once the letter is delivered.
In the letter explain that the collector has
agreed to accept the negotiated settlement amount as payment in
full for your debt. Keep a copy of the letter for your records.
If you plan to pay by check, add the following
disclaimer: "Cashing this check constitutes payment in full."
Write this disclaimer right on the check.
You'll want to emphasize this point in your
cover letter as well. Make it clear that if the enclosed check is
cashed, it means a debt collector has accepted your payment offer
and the debt is considered paid in full.
You may even want to hold off paying until
you receive a written confirmation back from the debt collector
acknowledging your payment agreement.
Take copious notes
Whether you send your payment with your letter or you wait, make
sure you have a copy of the payment agreement. You'll also want
to keep notes of the phone conversation in which you negotiated
the settlement. Make note of the day and time of the call, the name
of the collector that called and what was said.
The more proof you have, the better. You may
need it.
Some consumers get hassled with collection calls
on debts they've already settled.
Let's say you pay $1,000 to settle a $2,000
debt. Another debt collection company may call you demanding the
remaining $1,000. If you've kept good records, you've got proof
the debt is paid in full.
According to the Fair Debt Collection Practices
Act, a debt collector must send you a written notice telling you
the amount of money you owe, the name of the creditor to whom you
owe the money, and what action to take if you believe you do not
owe the money. A collector must send this notice within five days
of first contacting you.
Once you receive this notice, you have 30 days
to respond. If you send written proof that you've paid the debt,
a collector may not contact you again.
Firing off a copy of your payment agreement
with your old debt collector to a new collector should halt collection
calls. If it doesn't, you may want to contact a lawyer.
"They're breaking the law at that point,"
Ventura says. "I would consult an attorney."
To find a consumer attorney near you, visit
the Web site of the National
Association of Consumer Advocates and search for an attorney
with expertise in debt collection in your area.
Get it in writing
Having written proof is paramount when settling a debt with a debt
collector. And you'll want to be just as diligent with your records
when agreeing to a monthly payment plan to pay off an old debt.
With a payment plan, you'll make several smaller
payments rather than one big one. But by agreeing to a payment plan,
you may wind up paying closer to the full amount of your debt.
If you opt to settle a debt by payment plan,
be sure to send a letter to the debt collector outlining the payment
schedule in detail. Send this letter via certified mail and be sure
to keep a copy for your records. Whether you send the first payment
with the letter or wait until you receive written confirmation of
the payment schedule from the collection agency is up to you.
Don't send your check
Whatever you do, don't let a debt collector talk you into paying
with postdated checks.
"You're putting a lot of trust in people
you don't know," Ventura says. "People have given postdated
checks and unscrupulous bill collectors have gone into the account
and drained it because the account number is on the check."
Don't let a debt collector talk you into making
automatic, electronic payments from your checking account. You never
want to give a debt collector your checking account number.
"I get at least two to three calls a week
from consumers saying money has been improperly taken from their
bank account," says Peter Barry, a consumer rights trial lawyer
in St. Paul, Minn.
If you're worried about sending a personal check
to a debt collector, you may want to pay by money order instead.
Just be sure to keep records of your payment and your payment agreement.
Ask for a clean slate
And here's one last thing to consider when negotiating with a debt
collector -- your credit record. Ask the debt collector to remove
the collection account from your credit record.
"Ask them to remove any negative information
they placed on your credit report," Barry says. "There's
no guarantee they'll do it, but it's certainly worth asking for."
At the very least, ask the debt collector to
report that your account has been paid in full, rather than paid
in settlement.
If the thought of negotiating with a debt collector
makes you queasy, you may want to get some help.
"If you know you're not a good negotiator,
don't start," Ventura says. "You're probably going to
promise more than you ought."
Enlist the help of a credit counselor. For
tips on finding a good credit counselor, check out this
Bankrate.com article.
