Negotiate With Debt Collectors Rather Than Ignoring Them

Negotiate With Debt Collectors Rather Than Ignoring Them

When a debt collector calls, you know you're probably about to have a bad day. While your instinct may be to ignore the call, don't. Instead, use it as an opportunity to start negotiating.

Picture: Christian Schnettelker

Most of us are raised to believe that when a company gives you a dollar figure that you have to pay for whatever reason, that this number is non-negotiable. That's why debt collector calls are so terrifying. You expect that you're going to be told you owe some amount of money that you can't pay (and probably already know about), so you avoid the call to put it off. This is obviously bad for your credit, but it's also a missed opportunity. As personal finance blog The Financial Diet explains, you can often negotiate with debt collectors to lower the amount you owe, or at least create a more manageable payment plan:

Here's a secret I have learned in my (sadly) extensive experience with debt: Something is always better than nothing. If you can only pay a certain amount, hold firm (but kind) with the person on the phone and explain your situation. Say you want to pay, and give the amount you can realistically commit to (because a lot of times their automated estimates are way, way off), and don't waver until they meet it. Pretty much without exception, I have done this for my debts, and I've always paid once we met the right number. Sometimes it takes a few phone calls, and a bit of time, but once it's clear to the organisation that you are not going to do more, they will take what they can get. They just want to get that money, and they will eventually work with you.

It may not be a pleasant conversation, but getting an account settled is going to be better for you in the long run than ignoring a debt collector. Even if you can't pay, answer the phone and discuss with the collector what you can pay. You may not be able to agree on a number right away, and it may take multiple calls to come to an agreement, but the fact that you're willing to have the discussion will count in your favour.

7 Things I Learned About Credit From Ruining My Own [The Financial Diet via Rockstar Finance]


Comments

    If you are in money trouble, get your butt to a financil counsellor. They can do all the negotiating for you.

    If you can avoid making a payment or written admission of the debt for 6 years it is unenforceable and they have to write if off

      My information may be out of date, but I believe it is 7 years is the collection period that agencies have to get you to pay up.
      Naturally, after that period, they will still persist, because most people are not aware the debt has expired, and the collection agent is not going to disclose that information to you.

      Also, when that time period is close to expiry, they will ramp up their efforts to get you to commit to a payment, because once you agree to make a payment, the collection period starts from scratch.

      From recollection, it is the same in NZ, but the laws may have changed in he years I last looked at this.

        Turns out I was incorrect, and it is only 6 years, though some exemptions apply
        From Consumer Action:

        6 YEAR LIMITATION PERIOD
        For most debts, a debt collector or lender
        must recover the debt, or begin court
        action to recover the debt within 6 years of
        the date:
        - on which the debt became due and
        you didn't pay; or
        - that you last made a payment; or
        - that you admitted in writing that
        you owed the debt.
        The limitation period starts from the latest
        event in the above list.

        15 YEAR LIMITATION PERIOD
        The creditor has more than 6 years to
        collect the debt if:
        - a court judgment has been
        entered, in which case a 15 year
        limitation period applies for new
        actions;
        - the debt relates to a mortgage over
        property in which case a 15 year
        limitation period applies.
        These are complex issues and getting
        advice is recommended.

        REQUESTING PROOF
        Unless you are sure an old debt is not
        statute barred: :
         do not admit that you owe the
        debt;
         do not make a payment;
         do not accept a debt collector's
        word that you owe the debt.
        You should request details of the
        alleged debt and seek advice
        immediately.

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