With your lump sum in hand, contact the collection agency to negotiate a payment. Collection agencies will sometimes accept a reduced amount as payment in full. Making a first offer of about 33% of the amount owed is a good place to start. (A reasonable expectation is to settle for 60% of the amount owed.)
How to contact collection agencies
Telephone and mail are both acceptable ways to contact collection agencies. Using either method simply state that you want to make an offer for settlement.
Tips for communicating with collection agencies:
- Keep communication brief and to the point. Stay calm and professional. It may be helpful to write a script beforehand. Don’t explain the whole story or get emotional.
- Never make or accept an offer you cannot pay.
- Keep records of all conversations including date, time, agent’s name, phone number, address where you can follow up, supervisor’s name and phone number and any agreements made.
- Be sure they will accept your payment as “payment in full.”
- Ask that they remove the account from your credit report. The collection agency isn’t required to do this (until seven years after the date of collection), but some may as part of your settlement.
- Don’t give them your bank account information or pay by personal check. Mailing a money order or cashier’s check by certified mail is your best option.
- Don’t let collection agencies know if funds are available to pay the full amount.
The collection agency may accept the offer, make a counteroffer, or reject the offer. If they accept the offer, request written documentation (mailed, faxed or emailed) that the debt will be settled in full once the agreed upon payment has been made. Don’t send in payment until you have this information in writing. If they make a counteroffer, make sure you can afford that amount.
You have three options if they are unwilling to negotiate, or you cannot afford their counteroffer: Hang-up, call back another time. Move on to another collection account and try negotiations with them. Offer to pay the account in full and get a receipt.