Debt is a fact of life for many people, and it isn’t uncommon to fall behind on payments and have your debt sent to a collection agency. Most of these debts are unsecured debts, such as utility bills, credit card balances, and medical bills. In some cases, it may be possible to negotiate a better payment plan or pay off your debt at a reduced rate, but it can take experience and skill to successfully negotiate a better payoff plan. Here’s what you need to know about debt negotiations.
The Collection Agency
If your debt has been sent to a collection agency, they will work to recover anything they can get for your debt. Here is what you should remember when working with a collection agency:
- The agency didn’t lend you the money or extend your credit. If the collection agency bought your debt, or if they are just trying to collect the debt on behalf of your original creditor, their entire purpose is to maximize the return they can get. It may be possible they will accept less than you owe.
- Time is money, so the collection agency is interested in getting payment fast. They spend money each time they have to contact you, which you can use to your advantage.
- Know your debt priorities and your ability to pay. You shouldn’t make promises you can’t keep or provide the collection agency with too much information. You may find that you’ve turned your old time-barred debt into fresh debt, which can be pursued for much longer.
Options for Debt Settlement
You have several options you can offer the collection agency when negotiating a settlement. Your particular situation will often dictate which option is the best for you. An experienced bankruptcy attorney can help you review your options and can help you negotiate a settlement on your debt.
Lump Sum Payment
If you have the funds to do so, you can offer the collection agency a lump sum payment. The amount that you will need to pay can vary between agencies. Some will want 75-80%, while others will accept 50% or even less than 35% of your debt. Decide the highest amount you can pay before you call, and stick to it. A debt collector may try to talk you into settling for a higher amount once they see you are willing to pay anything.
If you don’t have the ability to make a lump sum payment, you may be able to negotiate a payment plan that can help you pay off the debt over time. This method is more likely to require you to pay off the entire debt, as there is little incentive to settle for a decreased amount when you are making them wait for payments. You may also have to fill out statements regarding your assets, income, and expenses. These can give the company more information about you, which can be used against you. You should not lie on these statements, though, since doing so can result in serious legal consequences.
Improvement to Your Credit Report
While negotiating for a settlement method, you should also discuss your credit report with the debt collector. They may agree to report your debt a certain way to prevent your credit score from being even more damaged by your debt.
Get Help from Experienced Brevard County Bankruptcy Lawyers - (321) 320-6088
Negotiations with debt collection agencies can be tricky, but you may be able to find a successful resolution to your debt with a knowledgeable, skilled Brevard County bankruptcy attorney. At The Buchalter Law Group, we are committed to helping our clients escape the heavy burden of their debt.
Contact our firm to learn how we can help. Request a free consultation by calling (321) 320-6088.