You’re so far in debt it’s a wonder you can still see daylight. There’s a debt collector on the other end of the phone, and he’s demanding a pound of flesh from around your heart. How can you make a deal that works for all involved?
It’s easy to get thrown off-balance by an angry bill collector. That’s the goal, after all – to keep you uncertain and defensive at all times. By retaining the upper hand in the negotiation process, the debt collector can continue to hammer away at you until you promise the moon and stars.
The industry thrives on fear and subtle psychological tactics. If you’re smart, however, you can come out ahead. Just follow these simple steps.
Take The Call. You know you owe the money, the debt collector knows you owe the money. When you avoid the call, that just serves to frustrate the person on the other end. You want to keep them in a good mood because it makes them more likely to work with you.
Establish Your Equality. The debt collector will typically go by the name “Mr. White,” “Ms. Brown,” or something along those lines. Using only a last name is an attempt at establishing superiority, and of keeping you on your heels. You’ve got two choices – call the collector by his or her first name (if it’s offered) or insisting that you be called by your last name as well. In this way you get to balance the scales.
Ask For The Balance Due. When the debt collector calls, ask for the balance they claim is due. Unless you know what you’re dealing with, you can’t make a game plan.
Ask For The Best Offer. You now know the alleged balance due, so you want to know what monthly payment the debt collector will accept. Be specific and ask for the best offer they’ve got. This forces the collection agent into a position that establishes a line in the sand.
Request It In Writing. Collection agents make hundreds of calls each day, so it’s important that you have a written record of the amount claimed to be due as well as the proposed payment plan. Offer up a fax number so you can get the proposal quickly, and make it clear that you will not make any promises in the absence of a written confirmation.
Don’t Take The Offer. You’re making a commitment to send someone your hard-earned money on a regular basis. Don’t be too hasty about it. Let the collection agent know that you need to review your monthly budget to see what it is that you can afford to send, and let it be known that you’d rather make a promise you can keep than one without a rational basis.
Make A Follow-Up Commitment. You can promise to call the collection agent back in 24 hours, or you can arrange for him or her to call you. Either way, make the commitment. By issuing the promise and living up to it, you’re proving your trustworthiness.
Present The Facts. When you make the follow-up call, be clear about your existing obligations. Don’t make excuses, just lay them out on the table for the collection agent to see. For example, “I bring home $1,500 per pay period and get paid every two weeks. That means I bring home $3,250 per month (26 pay periods per year, divided by 12 months). I spend $1,000 per month on rent, $400 on car payments, $200 on insurance [and on and on]. That leaves me with $x left over.”
Offer Up Some – But Not All – Of What’s Left. If you’ve got $300 per month left over, offer up less than the total amount you’ve got. Make clear to the collection agent that you need to ensure that you’ve got a few dollars left over for unexpected expenses. A failure to do so makes it more likely that you will be unable to live up to your end of the bargain.
Shut Up. Once you’ve made the offer, say nothing. In negotiations, the first one to speak is the one who loses.
Never Negotiate Against Yourself. Your offer is your offer. Don’t go up, don’t go down. If it’s not acceptable, let the debt collection agent know that you are not to be contacted again by phone, mail or in any other fashion. You’ll need to make this demand in writing in order for it to be binding, but under the Fair Debt Collection Practices Act you have the right to stop contact from collection agencies.
Try Again Later. If negotiations break down, try again in a month or so. Remember to end each negotiation attempt with a written demand to cease communications if your attempts are unsuccessful.
Always Be Polite. Debt collectors have a job to do. It may not be your job of choice, but it pays their bills and keeps their kids fed. Try to remember that they aren’t personally getting rich off this. If you’re nice, you’ve got a better shot that the debt collection agent will be civil as well.
Never Give Out Personal Information. Avoid giving your personal information such as bank information or employment data. Period.
In the end, you can’t promise more than you’ve got. Doing so is a recipe for disaster, so why do that to yourself? Take the time to do it right, keep records, and maximize your chances for successful negotiations.
Jay S. Fleischman is a lawyer who sues abusive debt collectors for violations of consumer protection laws.
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I found that it was impossible to negotiate any kind of deal because I was talking to someone in Bangladesh, India. Basically I was talking to a robot with an East Indian accent. Who, no matter what I said, played back the same recorded message.