A lot of times people fall behind on their debt and if they have no chance of paying off the full balance they can attempt to negotiate with their creditor or collection agency to lower the outstanding balance. Whether it is in regards to personal or business debt, negotiation skills can greatly improve one’s financial predicament.

Don’t Be Scared of Negotiation

The amount of people who are currently in debt yet fail to take advantage of debt negotiation processes is astounding. Often times it is because they either do not know of debt negotiation, are afraid of beginning the process, or have waited too long to make a move. People sometimes think that debt negotiation is a worthless strategy, yet they fail to realize that creditors and agencies want the debt cleared as much as they do. They want to be paid, they do not want to clear the account of any responsibility. This is why collectors are much more open to negotiation than one may initially think. 

When is The Right Time for Negotiation?

If your debt is somewhat recent and still valid (that is you are completely sure that you are still required to pay bills for it), and you can actually afford to pay some form of payment than you should highly consider negotiating the balance with the collector.

Alternatively, if you cannot afford to pay the collector because of low income and other bills that take higher priority than you should not enter into the negotiation process. Also remember that if the statute of limitations has expired on your account than you should not go into agreement because as soon as any sort of activity is done to the account, the statute of limitations is reversed back to zero rendering the account active yet again. If your income is exempt from collection processes (public assistance, veterans administration, pension, child support, social security) than again you should avoid the negotiation process.

How to Get a Good Deal

Here are some good strategies to employ when going through the negotiation process.

-Calculate the amount that you can pay, and then offer less so you will have some room to actually negotiate. Always remain firm in negotiations, never accepting more than you can afford.

-If you have the funds to do so, offer to pay the balance in a lump sum. It is common for collectors to give a relatively high discount if one agrees to pay a larger amount.

-Bring up your credit report and try to get the collection agency to report that the account has been paid in full rather than paid in settlement (which looks much better on the report).

-Try and take notes or record the conversation, and always get all agreements made in official writing. It is much better to be safe rather than sorry in these circumstances.

-Wait to negotiate until near the end of the month as collection agencies get paid based on the amount of money that they acquire each month, therefore waiting until the end of the month may garner you a better deal.

Remember that collection agencies like to prey on ignorance and try to scare people into paying them. There is always an option available to you in regards to debt, so do not lose hope if you find yourself in a bad financial situation. Taking the above tips and strategies into effect will help immensely if you decide to enter into the debt negotiation process.