Should You Get Help Negotiating Settlements?

Most of the debt negotiation help requests and questions I deal with come straight to me from the person who needs assistance and answers. But occasionally I receive phone calls from friends and relatives about a situation with someone they know. Here is a recent exchange about stalled out debt negotiations, why that can occur, and when it may be a good idea to seek out help from a debt negotiator.

Ron writes: I have 6 credit card debts I can not pay due to lack of work. I sold some stuff around the house and managed to settle 3 cards. Two of my cards have now charged off and went to law firms for collection. I tried to settle one of those and they will not budge on the amount. Any help or any chance you think they will budge later before I get sued.

Can I get help settling my remaining debts, or should I wait and see if I can get them to budge?

It is important to know when you hit a wall negotiating and settling your own debt, and whether you can clear the hurdle, or should get help.

6 reasons your debt negotiations may stall out, and when to seek help.

1. Your creditor is not known for offering reduce lump sum payoffs.

There are some smaller local banks that will just not negotiate a bill or settle for less. Some types of creditors, like a furniture store, or a medical service provider, are just not going to discount the balance owed. It can help a great deal to know in advance who will settle, and what the typical amounts may be.

2. Your creditor has a policy of not reducing the balance you owe if your account fits certain criteria.

Your balance could be too low, the account you opened too new, or the amount owed today was mainly from purchases you made just before you stopped paying your bill. Some banks refuse to settle when the bulk of the balance you owe is from balance transfers or cash advances. There are some helpful work around strategies in these situations that I cover elsewhere on the site, and can cover in more detail if you post what your concerns are in the comment section below.

3. Your prior success settling your other accounts is catching up to you.

Debt collectors are paying attention to your recent credit history. Some will use programs that are designed to show the collector how good a target you are for payment. The higher the score, the more likely they can collect. Some interpret what they see about your having settled other debts recently as a sign that they should hold out for full payment. You can avoid this by negotiating as many of your debts as you can in a short window of time, say 30, 60, or 90 days.

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Navigating this reality as it may apply to you is often better handled by a professional.

4. You look like someone who can pay the full balance.

Similar to number 3 above, but not because you settled other accounts recently, you look highly collectable. If you have a mortgage, car loan, or other secured loan payments being kept current when your other bills are not getting paid, it can impact how you are viewed by a debt collector. It is not at all helpful if you have other credit cards you kept current with, while selectively choosing not to pay a larger balance, or higher interest credit card bill, you look even more like someone who will pay in full (also can be a good profile for a debt collector to sue in court).

5. You said something in your initial negotiation efforts that triggered the hard line stance.

Debt negotiation in general does not require a recipe or formula to follow. Think of it like making an omelet, or a soup. Just about anything can go in those and have it turn out right. But there are times where negotiating your bills for less will be more like baking. Unlike a casserole where anything goes, baking often means the end product is highly dependent on how you follow a recipe.

I have picked up many a file and found that my customer told the debt collector something that would prevent me from giving the a discount too. Here are some examples of things you could say that are not productive to negotiating a good pay off deal with collectors:

  • I fell behind because I lost my job, but have a better paying job now.
  • I chose not to pay this bill because they would not work with me to lower my payments.
  • I have enough money to settle my remaining debts.
  • I am trying to qualify for a home loan (or refinance), but cannot because of this collection account.

You get the gist. You want to stick to discussing only elements of your situation and finances that support the collector accepting the limited money you have, or can pull from other resources, like a family member. Avoid discussing anything with a debt collector that would help them view you as someone who can pay more than what you are offering.

6. Time.

Ron is right to think about how it just may not be the right time to get a deal negotiated. If your negotiating with a debt collector right when they get your account, they are more likely to start with a "we do not settle and will only accept the full balance" position. But a month or two later, they may have a softer stance.

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Waiting out a debt collector is best when you know it is less likely you will be sued. Now that Ron's account is with a collection law firm, the reality of being sued is likely much higher. The strategy from here may be to make certain you are not sued, or be okay with it if you are. Much of what you do from here can depend on the balances on the accounts you have left to negotiate, who you owe, who the collectors are, and some other factors. Talking over strategies for dealing with collections at the stage Ron is at with his last 3 accounts would be extremely helpful.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

I support people everyday with their DIY debt negotiations. But I also know there are people and situations that could benefit from hiring someone to do part, or all of the debt negotiating. Ron may be in a situation that could benefit from getting help from a debt negotiator to help resolve the debts he has left. You may be reading this while looking for help and answers too.

You can call the debt help hotline you see on the screen, and choose the option for a debt negotiator, and receive a no cost consult to see what getting some help will look like for you.

Anyone with questions or concerns about dealing with a collector who will not budge on settling for less is welcome to post in the comments below for feedback.


This article by Michael Bovee first appeared on Consumer Recovery Network and was distributed by the Personal Finance Syndication Network.


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