How to Negotiate Credit Card Debt with a Collection Agency

The bottom line when it comes to negotiating credit card debt with a collection agent is to first find out if that debt is with the original lender.  For example, if you have a credit card with a bank, and you are in debt or have stopped paying for any reason, they will chase you for around six months to maybe a year.  After that period of time, the bank sells the debt to a collection agency.  Why is this important?

The importance of who you are negotiating the debt with comes down to the fact if you are NOT negotiating with the original lender, realize they have already written the debt off!  That’s right, they have taken the loss, and it’s called a write-off.  It means exactly what it says, they’ve taken the tax loss on that debt.  Before they did, they sold the debt to a collection agency for pennies on the dollar.  Now how does the collection agency make their money?  By trying to get you to pay them on the original lender’s debt, that’s how.  Why is this important?

The importance of this fact means that you have some leverage with the collection agency.  You really don’t owe the collection agency the money, as you had the original loan with the bank, and they’ve already written the debt off.  So when you deal with a collection agency, whatever you can afford to pay them will have to do.  Don’t let them push you around, don’t let them call you at all hours of the day and night, and whatever you do, don’t allow them to call you at work, as that is against the law!

Another important fact to know is that every state has what is called a statue of limitations on debt.  Some states give three years to legally allow an agency to collect the debt, some more.  Your first order of business is to find out what your state allows.  Why is this important?  Because if your debt is longer than the statue of limitations, then you aren’t legally obligated to pay the collection agency.  Since this debt is unsecured, there’s not much they can do, except threaten, and again this is illegal!

If you are being harassed for any reason by a debt collector, and that includes repeated phone calls after you’ve told them to stop calling, then send them a note on their collection notice to stop contacting you!  This is within your legal right, and they had better adhere to it.  If you can afford to pay off the debt for a reduced rate, then by all means if it makes you feel better, do it.  After all, you incurred the debt.  But in reality, if you can’t afford to pay, then there is really not much they can do about it.  They might threaten to take you to court, but the odds of that happening aren’t good as the courts are log jammed!

Remember this important fact when settling your debt, you’re in the driver seat, not the collection agent!