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Managing debt is already enough of a challenge, but dealing with debt collectors can make it a truly daunting experience. This is why it’s essential to know best practices when negotiating with collectors so that you can approach these conversations with confidence. Let’s explore some effective strategies for these negotiations, including dos and don’ts to keep in mind, and other helpful advice to empower you to take control of your financial situation
Know your rights
When struggling with debt, it’s all too easy to feel like you are powerless. Thankfully, individuals who owe money do have rights. Before you attempt to negotiate with collectors, it’s crucial that you familiarize yourself with the Fair Debt Collection Practices Act (FDCPA).
FDCPA is a federal law designed to protect consumers from abusive and deceptive practices by debt collectors. Here’s a brief overview of how it can help protect you:
- Prohibits harassment or abuse: The FDCPA prohibits debt collectors from engaging in abusive or harassing behavior, such as making repeated phone calls, using profane language, or threatening violence or harm.
- Regulates communication practices: Debt collectors must adhere to certain rules regarding when and how they can communicate with consumers about their debts. For example, they cannot contact consumers at inconvenient times or places, such as before 8:00 a.m. or after 9:00 p.m., unless the consumer agrees to it.
- Requires validation of debt: Upon request, debt collectors must provide consumers with verification or validation of the debt, including information about the original creditor and the amount owed. This helps ensure that consumers are informed about the debts being collected and can verify their accuracy.
- Prohibits false or misleading representations: Debt collectors are prohibited from making false or misleading statements in connection with the collection of a debt. This includes misrepresenting the amount owed, falsely claiming to be attorneys or government representatives, or threatening legal action they do not intend to take.
- Provides remedies for violations: Consumers who believe their rights under the FDCPA have been violated can take legal action against debt collectors. Remedies for violations may include monetary damages, attorney’s fees, and injunctive relief to stop the abusive practices.
- Know when to seek legal advice: If you believe a debt collector has violated your rights, consult with a consumer rights attorney to explore your legal options.
Try to get a settlement
Thankfully, individuals experiencing debt collection have some options. One of the leading alternatives to paying off a debt in its entirety is proposing a lump-sum payment for less than the total amount owed. This is known as a debt settlement. Start by offering to pay a percentage of the total debt, such as 50% or 75%, in exchange for the debt being considered paid in full. Be prepared to negotiate with the debt collector, as they may counteroffer with a higher amount. Aim to reach a compromise that is affordable for you.
Request a payment plan
If you’re unable to pay the full amount owed upfront, negotiate a payment plan with the collector.
Determine an affordable monthly payment that fits within your budget, and propose this amount. Be prepared to provide documentation of your financial situation, such as income statements or expense reports, to support your proposed payment plan.
Try to extend the statute of limitations
The statute of limitations is the period during which a creditor or debt collector can sue you for the debt. If the debt is nearing the end of the statute of limitations, you may be able to negotiate with the debt collector to extend the timeframe. Be cautious with this approach, as agreeing to extend the statute of limitations could restart the clock on the debt and make you vulnerable to legal action.
Get agreements in writing
Always get any agreements you reach with debt collectors in writing before making any payments.
The written agreement should outline the terms of the settlement or payment plan, including the agreed-upon amount, payment schedule, and any other relevant details.
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Dos and don’ts of negotiating with debt collectors
Dos:
- Do remain calm and professional during negotiations, even if the debt collector becomes aggressive.
- Do request validation of the debt in writing within 30 days of initial contact.
- Do negotiate for a payment plan or settlement that works for you, but get any agreement in writing before making payments.
Don’ts:
- Don’t ignore debt collection notices or calls, as this can lead to legal action or further collection efforts.
- Don’t agree to pay more than you can afford or make promises you can’t keep.
- Don’t provide personal or financial information over the phone unless you are confident in the legitimacy of the debt collector.
Seek professional help
If you’re uncomfortable negotiating with debt collectors on your own or if negotiations are unsuccessful, consider seeking assistance from a reputable credit counseling agency or debt settlement company such as JG Wentworth. We can negotiate with debt collectors on your behalf and help you explore other debt relief options, such as debt management plans or debt consolidation.
For example, here is a brief overview of our Debt Relief Program:**
- One monthly program payment: We start by working with you to assess your overall debt to determine if you qualify for our program. You then make just one monthly program payment into an account that you control, with an insured financial institution.
- We negotiate on your behalf: After you enroll and set aside funds, our team of skilled negotiators works with your creditors on your behalf to lower each enrolled debt – potentially knocking thousands of dollars off your total debt. As you accumulate money in your program account, it goes toward paying off the settled debt amount, plus your program fees.
- 24/7 support: We keep in touch every step of the way. Whenever there’s an update, we make sure to fill you in so you’re in the loop about your own finances. Our 24/7 online portal allows you to check your progress at your convenience.
In conclusion
Negotiating with debt collectors requires persistence, patience, and clear communication. By being proactive and exploring potential solutions – such as enlisting professional help – you may be able to reach a mutually beneficial agreement that helps you move forward with your financial goals. Remember, you have the power to advocate for yourself and work towards achieving financial freedom.
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* This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
** Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.