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12 Tips For Negotiating With Debt Collectors

Written by Mike Pearson
Updated September 26, 2022

Getting a call from a debt collector can flat-out ruin your day. Not only is it embarrassing to be reminded of unsettled debt, but debt collectors can be persistent, aggressive, and downright irritating. 

On the other hand, unpaid debts can drag down your credit score, making it hard for you to do things like buy a home, purchase a new car, or sometimes even move forward with your career. 

If you’re getting calls from a debt collector, it’s best not to ignore them. With the right know-how, you can usually negotiate with collection agencies on your own.

Here are 12 tips for making sure your negotiations go smoothly. 

#1. Know Your Rights

Let’s face it—debt collectors have a reputation for being pushy and aggravating, which is one of the reasons why most people avoid dealing with them. Unfortunately, some debt collectors even resort to illegal tactics to pressure people into paying. 

Before you contact a debt collector, it’s important to understand your rights under both state and federal law. The federal law that governs debt collectors is called the Fair Debt Collection Practices Act (FDCPA). It provides consumers with a number of protections, including: 

  • Debt collectors can’t call you on the phone before 8 a.m. or after 9 p.m.
  • If you ask a debt collector to stop calling you at work, they must honor your request. If they continue to call your work after you’ve asked them to stop, it’s a violation of the FDCPA. 
  • As the Consumer Financial Protection Bureau (CFPB) explains, “Repetitious phone calls that are intended to annoy, abuse, or harass you or any person answering the phone” are a no-no for debt collectors. 
  • Debt collectors can’t curse at you or engage in any kind of verbal abuse when they talk to you.
  • A debt collector can’t threaten to have you arrested for not paying your debts.
  • Debt collectors can’t tell your boss, coworkers, friends, family, or neighbors that you owe money.

If a debt collector violates your rights under the FDCPA, you can sue them for damages, as well as your attorney’s fees.

This is why it’s a good idea to record your phone calls with collection agencies, especially if one has started being abusive or threatening over the phone.

Likewise, if a debt collector has sent you harassing letters, keep copies of all mail correspondence in case you need to file a claim in the future.  

#2. Understand How Debt Collectors Operate 

Debt collection is a business, and debt collectors want to make as much money as possible off the money you owe. In most cases, collection agencies purchase debt from creditors who want to purge it from their accounts.

In some cases, original creditors maintain their own in-house debt collection departments. If you’re getting calls from a debt collector, however, chances are your debt has been sold to a third-party collection agency.  

By the time your debt has landed at a collection agency, your original creditor is likely out of the picture. This is why you can often negotiate a settlement with a debt collector rather than paying the full amount you owe. Debt collectors don’t pay full price for your debt, so they have some wiggle room when it comes to settlement.

The only way for a debt collector to profit off their investment (your debt) is to receive payment from you. In other words, they can’t file a lien against your property or have you thrown in jail. They might very well threaten to do so, but it’s a violation of the FDCPA if they do. 

They’re also prohibited from garnishing your wages, unless they file a lawsuit against you, win it, and then get the court to issue a judgment allowing them to attach your wages. In practice, it’s somewhat rare for a debt collector to do this, and you would get plenty of notice from the court before that happened.  

#3. Confirm It’s Actually Your Debt

Mistakes happen, and debt collectors aren’t always correct. If you get a call from a collection agency, don’t take their word for it that you owe money.

The internet makes it easy for just about anyone to gather information about you and create a sophisticated fake billing statement that nevertheless looks like a legitimate debt.  

Fortunately, the FDCPA gives you the ability to verify the debt is the real deal. Under the statute, debt collectors are required to give you specific information about your debt when they first contact you.

Most will do this in an initial letter. If they don’t, they’re required by law to put the debt validation in writing within five days of their first contact with you. 

From there, you have 30 days to dispute the validity of the debt in writing. If the debt collector can’t prove it owns your debt, it’s required by law to stop its collection efforts. Some debt collectors will attempt to get by with a basic billing statement that lists the amount you owe. This isn’t good enough under the FDCPA. 

On the other hand, the FDCPA doesn’t clearly define what does count as proper debt validation. In many cases, a collection agency will provide an account statement from the creditor, which proves the origin of the debt. Your state might also have more stringent requirements for debt validation than those found in the FDCPA.  

#4. Check Your State’s Statute of Limitations on Debt

In some cases, it might be better to not pay an old debt. This is because each state has a different statute of limitations for how long a debt collector has to file a lawsuit in an attempt to collect on a debt. Once that window of opportunity is closed, they’re generally barred from suing you. 

If the statute of limitations has run on your debt, it’s probably worth contacting the debt collector to see if they’re willing to accept a partial payment. You should also ask if they’ll agree to delete any negative information on your credit report. Once they know their options for collecting are limited, they might be more inclined to settle for whatever they can get. 

#5. Research Credit Reporting Time Limit

In addition to checking your state’s statute of limitations for unpaid debts, take a look at how long until the debt falls off your credit report. If it’s close to dropping off, the debt collector might be more willing to negotiate for less than what you owe.

Keep in mind that the statute of limitations is quite likely different from the credit reporting time limit. For example, the statute of limitations might have run, but the debt could still appear on your credit report for several years afterward. This is why it’s important to check both the statute of limitations and the credit reporting time limit.  

#6. Consider Disputing the Debt

Even if you believe the debt is accurate, it might be worth your time and effort to dispute it. This is because not every debt collector can validate the debts they purchase. For example, if the debt is several years old, the collection agency may not be able to satisfy the validation requirements of the FDCPA.

Another reason to dispute is the unfortunate reality of debt collection scams. There are many unscrupulous companies that mail out fake collection letters or make spam phone calls in an attempt to lure people into paying illegitimate debts.  

In short, don’t just hand over your money. Make the debt collector follow the rules and validate your debt. 

#7. Understand How a Payment Will Impact You

In many states, making any partial payment toward an outstanding debt restarts the clock on the statute of limitations. While you might want to do the right thing by paying money toward your debt, doing so could actually give the debt collector more time to file a lawsuit against you. 

Before you make any payments, know both the statute of limitations and the credit reporting time limit. From there, work with the debt collector to settle your debt and, if possible, get any negative items deleted from your credit report. 

#8. Be Wary of Using Debt Settlement Services

If you have significant unpaid debt, you might feel overwhelmed by the prospect of negotiating with debt collectors. In this situation, it can be tempting to turn to a “debt settlement service” or “debt adjustment company.” You might also hear them referred to as “debt relief” companies. 

In most cases, these companies don’t deliver on their promises. As the CFPB warns, they typically charge high fees with less than impressive results. The majority of debt management companies require you to stop paying your bills altogether. Instead of making payments on your debt, they require you to place that money in a separate account.

From there, they negotiate with debt collectors on your behalf, and they use the money you set aside to work out settlements for your debts. These are all things you can do on your own for free—and without the risk of collection agencies filing suit against you. 

#9. Consider Enlisting a Credit Counselor for Help

If you’re truly overwhelmed by calls from debt collectors, it might be wise to enlist the help of a credit counseling service. This is different from a debt settlement service. For one thing, credit counseling services are generally non-profit agencies that help consumers lower their debt and develop healthier money management strategies.

When you work with a credit counseling service, your counselor will usually review your credit report and debt situation for free and then recommend a strategy for getting back on track. In some cases, this might include a debt management plan.

With this type of arrangement, you don’t stop paying your bills. Instead, you pay into one account, and the credit counseling service handles making payments to your various creditors.  

Unlike debt settlement companies, credit counselors generally offer their services for free or at a relatively modest rate. For example, you might pay a $50 fee to enroll in a program and then a $25 administrative fee each month while you’re participating in a debt management plan. 

#10. Calculate how much you can afford to pay back

Before you contact a debt collector, take a deep dive into your financial situation. For many people, falling into debt is an important wake-up call for getting their finances in order and being more responsible with their money.

While you might be tempted to pay off your debts and settle everything that’s outstanding as quickly as possible, this won’t do you any good if it eats too far into your budget. 

If you can afford a lump sum payment or a few smaller payments to settle your debt, doing so can help boost your credit score over time. However, you should avoid doing this if you don’t really have the extra funds to make it work. 

#11. Offer a Lump Sum Payment

Debt collectors don’t pay full price for your debt, which means they can accept less than what you owe and still make money. In some cases, they might even be willing to take a fraction of the total amount. If you can offer a lump sum payment, they’re usually more likely to settle a debt.

For example, if you owed $1,000 to the original creditor, the collection agency might have bought your debt for as little as $100. If you offer them a 50% lump sum payment, they still end up with $400 ($1000 minus $500 minus the $100 they paid to purchase the debt). That’s a pretty decent return on their investment. 

#12. Record the Agreement in Writing

If you’ve successfully negotiated a lump sum payment or a series of payments with a debt collector to settle your debt, congratulations! However, your work isn’t done. Specifically, you need to get any agreement in writing.

This ensures the debt collector can’t change the terms or back out of the agreement down the road. When you put everything in writing, include the name and job title of the person or people you talked to at the collection agency.

You should also include dates, your account information, details about your original creditor, and how much you’re paying to settle the debt. If the debt collector has agreed to remove any negative items from your credit report, you should include that too. 

Take Charge of Your Debt

Dealing with debt collectors isn’t fun. However, if you’re willing to put in the time and effort, you can often settle outstanding debt for a fraction of what you originally owed. 

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Mike Pearson

Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in Investopedia,, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.