Negotiating with Debt Collectors (United States)

Most people who are contacted by debt collectors eventually negotiate a payment agreement – even if it is not an agreement with which they can comply. This page provides information that can help you decide if you should negotiate a payment agreement, and if so, how to get an agreement that you can pay comfortably.

When should I negotiate a payment agreement with a debt collector?

debt payment

If the debt is recent, if you agree that you owe it, and if you can make some payments, you should consider reaching a payment agreement with a debt collector.

When should you NOT negotiate a payment agreement with a debt collector?

It is probably not in your best interest to negotiate a payment agreement with a debt collector if:

  • You cannot pay the debt collector because you have a limited income, and you need all the income to pay debts that have higher priority. For more information on how to prioritize your debts look here.
  • The debt is so old that the statute of limitations has expired or is about to expire. If you make only one payment, you will reset the statute of limitations, and the creditor will have an additional six years to sue you.
  • You are a victim of identity theft, or you don’t owe that debt for any reason.
  • Your income is exempt from collection because it comes from a protected source, such as Social Security, Public Assistance, Veterans Administration, child support, or a pension.

If you are considering negotiating a payment agreement with a debt collector, what are the first steps you should take?

debt collection

  • Give priority to your debts. Calculate if you could really pay the debt, and, if you can do it, how much you can pay. For most people, paying for basic necessities such as housing and food are more important than paying credit card debts.
  • Know your rights. The information and links that appear on this website are good starting points.

If you can make the payments, how do you get the best arrangement?

  • Decide how much you can afford and offer less. Thus, it has room to negotiate. Be firm, and never agree to pay more than you can.
  • If you can, offer a lump sum. Many times debt collectors offer a significant discount in exchange for a larger payment.
  • Stay calm and under control, no matter what the debt collector says.
  • Take good notes. If you can do it, record the conversation.
  • Talk about your credit report. Insist that the debt collector delete the information from your credit report. At the very least, try to get the debt collector to report that the debt has been “paid in full” instead of “paid by agreement.”
  • Obtain the written payment agreement, including the agreement to change the information on your credit report.
  • Negotiate at the end of the month. Debt collectors receive your payment based on what they collect each month, so you are likely to receive better terms if you wait until the end of the month.

When negotiating with debt collectors, what should you NOT do?

  • Do not make an agreement that you will not be able to comply with.
  • Do not try to explain your personal circumstances to the debt collector. The debt collector hears these stories every day and will not give you a better deal for sympathy.
  • Do not give personal information to the debt collector, such as your bank account information.
  • Do not allow a debt collector to take automatic payments from your bank account.
  • Do not pay a debt collector with a postdated check.
  • Do not pay until you have proof of your written payment agreement.

If it is not possible to make payments, what should you do?

If it is not possible to make payments, what should you do?

Write a letter to the debt collector saying that it is not possible to make payments at the moment and that you would like the debt collector to stop communicating with you. This type of letter is called a “cessation letter,” and you can use this Exemplary Cessation Letter as a model. Watch for court documents. You may not receive documents, but if you receive them, you must respond immediately to protect your rights.

If the statute of limitations has expired, but you want to pay your debt, is there a way to repay it without restarting the statute of limitations?

Yes. Separate money into a savings account until you have enough to pay off the debt. Contact the creditor, the debt collector, or the debt buyer and make an offer to pay the debt in a lump sum in exchange for the entire obligation of your debt being taken away. Get the agreement in writing before making any payment. Pay with a check and write on the check “the collection of this check means full payment”. Make a copy of the check before sending it, and make a copy of the agreement as well.