Basics of Negotiating with Collection Agencies

May 10, 2013 Posted by Andre Hemmersbach

These simple tactics work on unsecured debt only, mainly credit cards to include department store cards, medical bills and bounced checks. You cannot negotiate on Liens, Judgments and other items.

Remember you always want to negotiate for removal of the derogatory item.

  • An old unpaid collections account is far better for your credit score than a recent paid collection account.  A paid collections account is a negative mark on your report, therefore always negotiate for the removal of the derogatory item!

There are two basic methods to negotiate with collection agencies.

First of all you will want to negotiate with a manager, not some customer service rep as they usually don’t have the authority. It’s also important to only work with them via written letters or email so you have a paper trail.

1)      Payment in Full. Let’s say you have a $500 debt with an agency. Offer them $200 to settle the debt and to have the item removed from the Big Three (Trans Union, Equifax and Experian). They have probably only paid pennies on the dollar so trust me, they are profiting and willing to work with you most of the time. Do not let them simply update the item to a paid collection or paid account.

2)      Set up a payment plan. If you don’t have the cash on hand offer to make monthly payments  which you can afford and make sure to get the agreement in writing! It can be a simple written contract which states that the collection or derogatory rating will be removed after the agreed upon amount is paid in full.

If you have any questions regarding this or any other tips on increasing your credit score please call me.

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About Andre Hemmersbach

Andre Hemmersbach has been working in the mortgage banking business for over 20 year helping people successfully finance their real estate holdings. He can be reached at (310) 540-1330 #137.

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