Ever since credit cards and loans came into the picture, consumers have been able to spend more than their income. However, the downside is that it has led to the accumulation of debt, which at times, can be hard to pay off.
According to a report by the Consumer Financial Protection Bureau, one in every four US citizens has at least one debt in collection. Additionally, as per Experian, in 2019, consumer debt increased to a whopping 14 trillion USD.
Various lenders make use of debt collectors to collect loans from borrowers. In 2018, the debt collection sector generated over 11.5 billion USD in revenue.
At times, borrowers don’t appreciate the tactics used by debt collectors.
For instance, a survey conducted by Debt.com revealed that 13 percent of people didn’t like the communication strategies used, and 13 percent of borrowers reported being threatened with legal action in case of non-payment.
While there are times when debt collectors agree to cooperate, at other times, they don’t.
So, the question arises, what can you do to negotiate with debt collectors? And what happens if they refuse to cooperate?
Accept The Creditor’s Demands
In case a creditor refuses to negotiate, you will have to comply. This is because, according to the Federal Trade Commission, no creditor is required by law to accept settlements offered by a debtor. It applies to debt collectors as well.
In fact, the debt collector might ask you to pay the debt in full as well as add additional interest and fee to cover the cost incurred by the creditors in collecting the debt.
In case your debt collector refuses to negotiate on the settlement offer you propose, you can try your luck by revising the offer. Here, try to reach a middle ground and put a reasonable offer to the debt collector.
For instance, let’s say you are unable to pay your debt in full. You propose to pay it back in additional installments over an extended time. The debt collector refuses. Here, you can increase the number of installments or reduce the time.
Contact The Creditor
If your debt collector refuses to negotiate, you can approach your original creditor. However, this method applies only if the original creditor still owns the debt and hasn’t sold it.
Here too, just like with debt collectors, there is a chance that your negotiations turn out to be futile. In that case, try to remove the stalemate by being flexible.
Seek Help From Professionals
Not everyone is equipped with the knowledge and expertise to negotiate with professional debt collectors.
Remember, the collectors are well-versed in their job and hence are more likely to have the upper hand during the negotiation process.
Debt collection is a complex process and people have various questions in mind about the process. Some of the most common questions are:
- How to check if the debt collector is legitimate or not?
- Can the debt collection agency sue me?
- Can debt collectors issue a warrant?
Thus, taking help from a professional who has expertise in matters related to debt can help you better understand the process.
Having the requisite knowledge can help you to know your rights during the negotiations. It gives you a better shot at settling the debt at terms that are suitable to both you and the creditor.
How To Negotiate With Debt Collectors?
In case you wish to negotiate with debt collectors on your own, here are some tips to help you along the way:
1. Research How Debt Works
Do you know that there have been instances where debt collectors fabricated bogus debts and scared borrowers into paying them?
To make sure you don’t fall into such traps, you must be well-versed about how debt works. Do your research and know your rights.
2. Leverage The Statute Of Limitations
One way to get creditors or debt collectors to negotiate is by leveraging the statute of limitations. This law stipulates the period in which a debt remains legally enforceable. After that period, it is much harder for creditors to initiate legal proceedings against the debtor.
Therefore, creditors have a time limit within which they must get their money back. It will help if you use this limitation to your advantage during negotiations.
3. Know What You Can Pay
When negotiating, the last thing you should do is make an offer that you can’t comply with. Thus, take your finances into considerations before making an offer.
Try to find ways where you can pay off your debt in a shorter time. Don’t spread it too much, or the debt collector might not accept the offer.
If a debt collector refuses to negotiate, make sure to try the different methods mentioned in the blog to get them to come around. If everything fails, it is best to find ways to pay back your loan.
Regardless of what you do, remember that your actions will affect your credit score and ability to get loans in the future. So, proceed with caution.