How To Negotiate With Credit and Collection Agencies

Working with collection agencies can be one of the most frustrating experiences that you go throughl

. It is not enough that you are having a difficult time paying your bills. But, now, you have the added humiliation of having to suffer through the collection agency's constant calls to your house.

Probably the most important thing to try to do when negotiating with credit collection agencies is to not be intimidated by the various agents. Remain calm and focused as you work with the agents in attempting to work our a solution amenable to both you and the agency. And, knowing how collection agencies work gives you a head start in your negotiations with them.

For the most part, collections agencies get their accounts in one of two ways. The first is that the creditor hires them outright to collect past due accounts. The agencies work under the rules of the creditor and report directly to them. They are paid either on a salary basis, commission basis, or a combination of both.

The second way that a collection agency gets their accounts is by purchasing debts from the creditor. In this case, the collection agency owns the debts and they set their own rules regarding how they will collect debts from debtors.

As mentioned, In the first scenario, the collection agency is working with the creditor and has limited options as to how to handle your debt. They also do not usually have a lot of leeway in what they are able to negotiate with you. In this scenario, you can get the best deal by contacting the creditor and attempting to negotiate a deal directly.

It is possible that you will be able to get them to authorize you to make late payments, decreased payments, a reduced amount of interest, or any other options that are acceptable to you both. You may even be able to completely restructure the terms of the loan. The key is to convince the creditor that you are serious about making restitution. If you can do that, they may pull your file from the collection agency and deal with you directly.

In the second scenario, where the collection agency owns the debt, you can negotiate directly with them. They have complete control over the debt and will often be willing to work out a deal with them. Their incentive is that they have often purchased the debts at pennies on the dollar. So they really don't have to make as much from you in order to make a profit.

For example, if you owed the original creditor $10,000, the collection agency may have purchased your debt for only $3,000. In this case, if you make them a reasonable offer of $4,000 to consider the debt paid, they may be willing to accept knowing that they may spend a lot more than that attempting to collect the full amount. Each case is individual, but at least you should realize that you have negotiating room.

How To Negotiate With Credit and Collection Agencies

By: Susanna Berlatsky

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