It’s never a fun position to be in, but sometimes many people find they are so past due on their credit card debt that the only solution seems to be bankruptcy. That should be a last resort and even then you have to be careful as new bankruptcy laws don’t just make your debt disappear. In most cases, you still have to pay it back. It’s just better for you and your credit score if you figure out a way to do it before actually filing for bankruptcy.

It is possible to negotiate your own settlement with collectors. It’s not going to be an easy task by any means, but with a little patience you may be surprised at the outcome. If you’re four months or more past due, now is the time to start considering a settlement arrangement. The sooner the better as it will make negotiating a lot easier.

Negotiating 101

So here’s the deal. Debt collectors are NOT going to be nice, plain and simple. Everyone is aware of that. They’re sole job is to make sure that you pay that debt and if that means hounding you until you cave in, that’s what they’re going to do. However, many of them count on you not knowing your rights as a consumer and so they try to intimidate or harass you at all hours of the morning and night. The first step you need to master before attempting to negotiate your own debt is to know your rights. Visit The Federal Trade Commission’s website and read over the Fair Debt Collection Practices Act. You may be surprised to know that many agencies violate your rights in an effort to collect.

Get your emotions in check! You need to remain calm and polite throughout this process, no matter what. I know that’s easier said then done, believe me, but the maxim ‘you’ll catch more flies with honey than vinegar’ is especially true when your flies are debt collectors. If you want them to take your proposal seriously, be courteous. Too many people take for granted what simple, good manners will get them these days.

Be prepared. You wouldn’t walk into a business meeting with a room full of clients unprepared, so don’t be unprepared to speak with your creditors. You’re talking about making a business deal so know what you want and be reasonable with your requests. Before making the call, sit down and figure out what you can afford to pay per month or in a lump sum. If you have a $10,000 debt, don’t expect to pay $2,000 and call it even. That won’t fly with these guys and you’ll lose your bargaining chip. Also have your statements, pen, paper, and a calculator on hand.

Make the call. Call your collection agency and present your proposal to the agent. Remember, they’re not going to be nice and the first thing they will ask you for is a current phone number and address; makes it easier for them to keep tabs on you. Once you’ve explained your situation, the ball’s in their court. If the collector doesn’t seem receptive to your ideas ask them for theirs and see where it takes you. If it is a reasonable proposal, then take them up on the offer. If not, then explain those terms are unacceptable and keep discussing. You may run into an instance where the collector refuses to budge from their position. First, keep your cool. Remember you’re more likely to get what you want if you’re polite. You have some options at this point:

1.) End the call. Don’t hang up on the individual you’re speaking to. Politely thank them for their time and say that you’d like to consider your options a little more.

2.) When you call back ask to speak to a supervisor or department manager. You’re likely to run into resistance with this, so be prepared. However, speaking to someone in charge can be very favorable to your negotiating tactics.

3.) Write a letter addressed to the department manager. Include your payment plan and be specific with the dates and amounts you will be paying. If possible, include a check with the letter. If they cash it, that can be considered accepting your terms in most states. However, double check the state where the credit card company is based out of as all activity is governed by that state.

A Favorable Negotiation

The idea is to get this debt to a more manageable number so that you can pay it off as quickly as possible. One of the best ways to do that is ask the creditor to knock off late fees, finance charges, and over the limit fees which typically account for 30-40% of the total outstanding debt. Some may accept the offer right away, depending on how past due you are; however some will refuse. If that’s the case, politely decline to make a decision at that time and wait. In many instances, the creditor will send you a more favorable deal within a few weeks. Collection agencies are paid to collect debts, so their goal is to get as much as possible as quickly as possible.

Important Points to Remember

• Always keep a record of who you spoke to. Write down the date, time, name, and phone number of the person you made the agreement with. This will come in handy if there is ever a dispute over the settlement.

• Always get a letter of the agreed terms of the settlement. A verbal agreement won’t cut it if the issue goes to court, so always protect yourself. Be sure the letter includes the terms of the settlement in detail.

• Never use profanity or a raised voice when dealing with your collectors. This doesn’t get you anywhere and often the calls are monitored and recorded. It’s very hard to make a case for yourself with a manager when you’re yelling at their employees

• Be reasonable and consistent. Don’t change terms every time you call, and if you do reach a settlement, be sure to stick to your end of the agreement.

Follow these tips and you will be well on your way to making a payment plan. Try to get yourself back on track as soon as possible so that you can start rebuilding your credit. Once your debt hits collections, it drops your score significantly so avoid it if possible. But, bad things happen to good people so get through it and get back on your feet!

Related posts:

1. Debt Collector’s Getting Their Day In Court
2. How to use The Fair Debt Collection Practices Act to your advantage
3. Subscriber Swap Saturday: No Debt Plan
4. Credit Card Debt After Death
5. Divorce and Credit Card Debt don’t mix!