When you get a call from a debt collector, you are past the point where you can negotiate with the original creditor. Debt collectors are in the business of making a profit from your debt. They will have purchased the debt from your original creditor for pennies on the dollar. They will generally not allow you to negotiate with the original creditor because they no longer own the debt. Therefore, if you let a debt go to a debt collector before paying, chances are it will affect your credit score. Here are three tips for dealing with debt collectors.
Negotiate with the original creditor
Before your debt has a chance to go to a bill collector, you should call and attempt to negotiate with the original creditor. If you understand that they sell your debt for pennies on the dollar, you should also understand they will be willing to give you that same deal. They want to recover as much as possible of what you owe, so they will be willing to write off your debt for far less of an amount. Paying it off directly with the original creditor will also protect your credit score. While it will still show that you paid late, it will not affect your credit score as severely as if you wait to pay it until after it goes to the debt collector.
Get everything in writing
If your original creditor or a debt collector agrees upon conditions, the most important thing to do is to get it in writing. While most businesses and creditors automatically do this, it will be solely in their best interest from the perspective of terms. Therefore, you need to ensure the terms of the debt agreement are mutually beneficial.
To assist you with this, you should consider hiring a firm specializing in debt consolidation or elimination. These firms will specialize in terms that will be in your best interest. You also need to consider drafting your terms as agreed upon and sending a copy to the creditor so that you have recourse should the creditor break the agreement. Most debt collectors or original creditors will settle for up to 50% of the bill, sometimes even more when it comes to debt collectors who will still make a profit.
When setting up the terms, the most important thing is that you understand your rights and verify your debt. You also need to understand statutes if you are not going to be paying it all at once. Once you make a single payment, the debt collector starts the statute of limitations to take you to court to recover the debt. So if you cannot pay it all at once, make sure you are diligent about making the payments on time or early.
Don’t take their word for it
There are a lot of scams that are generated through phone calls about debt. You should verify the company before sending them a dime. First, call the original creditor. They should tell you who they gave the debt over to if they did. You may also find you can negotiate with the original creditor and save your credit score. You can also check your credit score. Many sites offer it for free as often as you need to check it without your credit consequences. The credit report will have the reporting company along with their address and phone number.
Conclusion
Of course, ideally, you should pay your debts and not wait to pay them until they go to a debt collector. However, life happens, and it can’t be avoided at times of financial strain. If you understand your rights, you can use these tips to benefit and keep the debt from destroying your credit score. Most importantly, you need to work at securing control of your debt as soon as possible to avoid further damage or future court proceedings.
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