Top 10 Tips For Negotiating With Debt Collectors

Even before the devastating impact COVID had on people around the world in 2020 and 2021, managing finances and staying in control of debts was a constant struggle for many people.

Many people struggle to manage their debt due to factors outside of their control and it is always a very challenging time emotionally. Dealing with debt collectors and debt collection calls is often the last thing you want to have to deal with, sometimes on a daily basis.

In this article we will give you 10 proven tips to help you when negotiating with debt collectors. If you follow these tips they will help you to repay debts, or at the very least, get your debts back under control.

Before we start, debt negotiation is the process of agreeing on a reduced balance or improved repayment terms with your creditors. It is a debt management solution for people or for businesses who want to avoid filing for bankruptcy or receivership which would be a lose-lose situation for both the borrower and the creditor.

So what steps should you take to prepare for, and execute, a debt settlement negotiation?

1. Understand What Debt You Have

This is a very important place to start. You may have lots of debt but not all of it will be due immediately. Even if you have fallen behind on all your payments, some debts will have been in arrears longer than others and will be more progressed in terms of escalation by the debt collectors or creditors. Start by making a list and include the the following important details; - Name of Creditor / Debt Collection Agency - Amount Owing - Interest Rate - Amount Overdue - Number of Days Overdue Being able to see this written down in black and white will help you prepare for an effective debt negotiation. Often after a certain amount of time, overdue debts become payable on demand, which means the creditor can ask for it to be paid immediately, so getting on the front foot with your debt negotiation is important while you can still control the conversation.

2. Prioritise Which Debt Needs To Be Paid First

Once you have created your list of debts, you can then start to plan which ones are important to prioritise for a debt negotiation and debt settlement. Consider these important factors; - Which debt may put key personal assets at risk like your family home or may jeopardise your lifestyle and ability to work, like a car loan? This would include any loans you have that use your property or home as collateral like a mortgage or investment loan. - Which debts are likely to result in legal action or bankruptcy. These will typically be higher balance debts or ones where there is collateral like a property or motor vehicle assigned to the loan. The legal process can be costly and incredibly stressful so better if you can negotiate your way out of it. - Which debts have the highest interest rate? Resolving these before lower interest rate loans will save you a lot of money over the long term. In many cases, if you are in arrears on your debts then default interest rates may be getting charged and these can be significantly higher than the normal rate you were used to paying when you first got the loan. Prioritising your debts is important as it well help you understand which debts you need to prioritise your money for to make a debt settlement happen. Keep in mind, not paying your debts can have consequences, so it is an important step in the process.

3. Calculate How Much You Can Afford To Pay

Before you start pitching your debt settlement offer to debt collectors, you first need to understand how much you can afford to pay. There is no point coming to an agreement to settle your debts if you cannot complete your end of the bargain because you don't have the money to pay the negotiated debt settlement amount. Do a check of how much you have in Bank accounts, how much you can borrow from family or friends or how much you could get from selling some of your assets. If you are looking for some extra ideas, have a look at this article on how to raise money for a debt settlement negotiation.

Once you have finalised your numbers, you can then decide what your preferred debt negotiation options may be and how much you could pay for each debt.

4. Choose Your Preferred Options To Settle Your Debt

Once you know how much money you have to work with, you can look at your debt settlement options that you can put on the negotiating table with debt collectors. There are a number of options here. You could; - Offer a percentage of the total outstanding debt - Offer a payment plan based on the spare money you have each month after you get paid - Offer an amount to have the interest rate reduced to zero or reduced

Remember, it doesn't have to be the same percentage for each debt. Consider how much leverage you have in the negotiation.

There are a number of options here and it is important to have an open mind and be flexible on a case by case basis with debt collectors and creditors. It may mean some deals will be better than others with creditors, but if you can get all your debts settled within the total amount of money you have at your disposal, it is going to be a great outcome.

5. Prepare Information To Support Your Debt Settlement Negotiation

This is a really important part of the debt negotiation process. Debt Collectors and Creditors will want to validate your story and validate that your financial position such as your income and liabilities is as dire as what you have projected. You can accelerate the debt negotiation process by providing all this information upfront, making it easier for the debt collector or creditor to make a decision quickly. can guide you through all the different types of documentation you can use to support your debt settlement negotiation through its information guide. The information guide is complimentary when you purchase access to our fully digital debt negotiation letter generator.

6. Create a Debt Settlement Negotiation Letter

Using a debt settlement negotiation letter is a great way to not only start your negotiation with debt collectors, but is a great tool to get it accepted without even having to speak to a debt collector on the phone at all.

A debt settlement negotiation letter allows you to explain to debt collectors or creditors how your debts fell overdue and what your current financial situation is. Your debt settlement letter can also explain the effect that filing for bankruptcy or having legal action taken against you would have on your financial and personal life.

The debt settlement negotiation letter will also propose your debt settlement offer to the debt collector or creditor with the specifics of how much you will pay and when.

To make your position strong, always provide documentation to support your finances or key statements as this will give you the best chance of having your debt settlement offer accepted. offers a fully digital tool to create your own debt settlement negotiation letter.

7. Present Your Debt Settlement Offer Professionally

Emotions can often be heated and volatile when dealing with stressful situation like negotiating payment of your debts with debt collectors. What is really important here is that you express yourself and your situation professionally and ethically. At the end of the day, you are dealing with people and how you conduct yourself will have a significant bearing on the outcome of your debt negotiation.

Treat your case manager or phone operator with respect. It will get you a better and faster result.

You should also make it clear to your creditor or the debt collector that you are taking responsibility for your debt and that you are trying to negotiate a reasonable payment amount.

8. Hold Your Ground & Ask For Your Debt Negotiation Case To Be Escalated

If you present your debt settlement offer and it is not accepted, or the counter offer is not an amount you can pay, do not worry. Debt negotiation is a process.

Be firm with what you can pay and the reasons why if you genuinely cannot pay more. At the end of the day the creditor is going to want to get some of this debt paid rather than working on it for years and potentially getting nothing. They are a business and ultimately a decision will be made that is in their commercial interest. Always counter offer to their counter offer. Work out little things you are willing to concede in order to get a deal done. For example, if the debt collector wants more money, ask for more time.

9. Ask For Acceptance Of The Offer In Writing

Whenever you reach a final debt settlement agreement with a creditor or debt collector, be sure to get the offer in writing, whether it be via an email or letter. It is important so you can demonstrate that you have agreement should you end up dealing with another case manager. You can also use it to demonstrate to other creditors what others have been willing to offer and ask them to match the same terms and conditions.

10. Pay Your Agreed Debt Settlement On Time

Once you have your debt settlement agreement in writing from your creditor or debt collector, it is important that you pay on time. Often the settlement offers are conditional upon you paying the agreed amount on time. If you don’t, you open the door for the creditor or debt collector to retract the offer and ask for full payment immediately. You don't want this to happen.

Final thoughts on debt negotiations

Being debt free and having your debts under control is without doubt a key factor in general happiness.If you follow these 10 steps you will have a very strong chance of a successful outcome when negotiating with debt collectors or creditors. is here to help give you the tools to effectively navigate the debt negotiation process and to settle your debts for the lowest cost and with the least impact on your as possible. Start your journey to debt freedom today!

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