Most people have debt accounts that they would like to take care of but are not able to clear them in full. Debt collection is not unique to individuals who are facing financial difficulties, it is something that also happens even to people who are responsible financially. A person can forget about paying a bill or have disputes with creditors on how much they owe. In some instances, billing statements may get lost during mailing and you fail to get a notification on existence of a debt.Regardless of what situation leads to debt, it is always better to manage your debt account rather than ignore its collection. Once the debts are payment, collection letters and calls will stop flowing, your credit score will improve and you will not be at risk of getting sued for debt.
However, if you find yourself in a situation where you are not able to repay your debts, you can negotiate an affordable repayment schedule with your debt collector. Though the debt collector might not agree to a debt review that lowers your repayment amount all the time, you might be able to agree on a schedule that allows you to pay off your debt in instalments. Being able to engage your debt collectors in negotiations can go a long way in finding a repayment solutions that favors you. Here are some useful tips that can help you negotiate with your debt collector successfully:
1. Have a clear understanding of the way debt collectors work
Like in any other kind of negotiation, getting as much information about your debt collector places you in a much better position to push for the deal you want. Debt collectors are often out to make money through collection of debts. They use two strategies to do this, they either increase fees on debts as stated by law or generate profits from debts they purchase at low costs. Of importance to note is that debt collectors can only earn cash after consumers clear the debt. They can never deduct payment from their consumer’s bank account, get a court order to deduct their wages or seize their properties to recover the debt.
2. Ensure the debt is indeed yours
There are instances where debt collectors pursue bogus debts or try to collect debts that are already cleared. It is therefore advisable to approach each debt collection with some skepticism and take time to verify that the collector is indeed pursuing a debt that is legitimately yours. Actually ask the debt collector to show you evidence that proves the debt is yours and that they have been authorized to collect it. You have the right to do validate the debt and you can do this in writing within 30 days after the debt collector contacts you for the first time. The debt collectors will cease the process upon receiving a validation request until they send you proof that indeed the debt is yours. After receiving satisfactory proof showing the legitimacy of the debt, then engage the debt collector in the negotiations.
3. Be aware of your rights
Before you engage debt collectors, be clear about your rights so they do not take advantage of you. Some rights you are entitled to include being called between 8am and 9pm. The collectors are not entitled to use profane words or harass you, they can only talk to your family members, employer or friends to get your contact information and cannot threaten you with illegal actions. However, debt collectors have a right to try and collect payment from you through letters, calls and featuring your pending payment on your credit report but this has to be done within the time line for credit reporting. Though you may request the collectors to quit contacting you, you cannot expunge a collection off your credit report unless the credit reporting timeline has passed or the information is not accurate.
4. Know your chances of winning a legal suit
Identify the things that would work for you in your negotiation with debt collectors. To begin with, identify whether the collector has any chance of winning if he filed a lawsuit against you. If the chances are lower, he will most likely agree to partial payment. This is based on the statute of limitations that affects the duration within which a debt is enforceable legally. When it passes, collectors have a tough time convincing the court to push you into repaying a debt particularly where you defend yourself based on expiry of time limit. To be sure this works in your favor, check how your state applies the statute as this varies from state to state and depends largely on the kind of debt.
5. Tap into credit reporting timeline expiry
Also, check the credit reporting timeline as this determines whether a debt features on your credit report or not. Where your debt is likely to fall off your credit report soon or has already fallen off, you are likely to have less incentive to clear it because it has no effect on your credit. You can use the expired credit reporting timeline to leverage your negotiation as the debt collector will be encouraged to work with what you can manage to pay.