I have a medical debt that has been sold to a collections agency. Can I offer them half as a payoff?

Question

Someone told me the agencies normally buy these accounts for a fraction of the amount due, then collect what they can, sometimes accepting half as a payoff amount. If I had had the money, I would have paid it off originally, but right now I'm not even making it paycheck to paycheck and the collections agency will not set up monthly automatic withdrawals or anything other than the full amount. Any suggestions? I'm not debating I owe the money, just can not pay it at this time.

Answer 1

You sure can. In fact, you should offer them one third or one quarter first. This gives you bargaining room. I've successfully done this with many of my credit cards, and got 50% off most of them. You need to know how to haggle.... Lets say you owe them $2000. If I were you, my dialog might go like this:

Creditor: Hey buster, we demand all our money, which is $2000. Pay up!

Me: Sorry, but I'm flat broke, lost my job, my wife is ill, and I owe a whole bunch of other creditors so get in line! But.... if you're willing to work with me, I can offer you $500 cash to settle the debt in full. OK?

Creditor: um, let me check with my boss.... (after a while he comes back)... My boss says we can offer you $1700 to settle, can you do that?

Me: No way. I'm thinking of filing for bankruptcy (this really scares them, because they could get nothing if I actually do that)
The most I can come up with is maybe around $700. and I'll need to make it in 3 monthly payments...

Creditor: Let me check with my boss again (takes some more time, telling his boss of my threat to file chapter 11).... comes back with: My boss says 1200 is the lowest we can go, and we can give you 3 months to pay...

Me: No way. How about $1000 and six months to pay? Thats the best I can do or I'll have to go the other route.....

At this point the creditor with either accept my offer or try to stick with the $1200 figure. We could then haggle over the payment terms (I could say ok to the $1200 but only with 6-12 months to pay, etc.)

The key is to play hardball hardship. Each creditor has their own rules and usually wants to hear how bad things are for you (play it up, got medical bills, credit cards, lawsuits, etc.). This is because they will only accept a low settlement if they think they cant collect it all from you otherwise. Some of them will not even negotiate if you've been sending payments. I usually let them sweat it out by not answering their phone calls or making any payments for about 5-6 moths. Also, just the threat of bankruptcy is very powerful. In reality, you don't have to do it. If they ever threaten to take you to court to get a judgement, just send a small payment ($50 would do), and if they accept it, they cant start the process over for another six months. (They cant get a judgement unless you haven't paid anything for at least six months... then a token payment stalls the whole process.)

Also, if you don't like their counter offer, say that you'll think about it and get back to them... they won't want you to hang up, especially if you don't return their calls and have a hard time reaching you. There is no debtor's prison, and the only resource they have is to try to collect the debt legally-- a long and tedious process, and even with a judgement ther'es no guarantee they can collect unless they have your bank account numbers (and you have money in the bank too) so don't write checks, use money orders. They also have to find out where you work if they want to garnishee, which is not easy to do and cannot be done without the judgement first.

One final word... when they accept your offer to settle, tell them to send it to you in writing and with their signature. Make sure they send you a legitimate agreement in the mail (no faxes) before you send them any payments.

Also, the amount you save in the settlement is will be reported to the IRS if it's over $500, so you'll have to pay income tax on that amount at years end. (they may point this out to you, to which you can reply that you can deal with that). But that's still a very good savings overall. example: if you're in the 28% tax bracket and you reduced the debt by $1000, the additional taxes would only be $280, so you still save $720 in cash!

The process can actually be fun, and you'll be proud of yourself when you succeed.

Good luck.

Answer 2

Make an offer, IF YOU CAN PAY IT OFF.
They won't accept half or less than total on a payment plan.

Collection agencies generally keep 50-60% of collections.
The creditor has written it off as a bad debt and would be glad to get any amount.

"the collections agency will not set up monthly automatic withdrawals or anything other than the full amount"

If you can do this, try to borrow the amount and then offer half.

Tell them it is all you can do. Their obvious choice is zilch.

If you feel morally obligated and want to pay it, send any amount you can, on a " regular basis ".
Tell them if they bug you they can swing. If they charge exorbitant interest, Give 'em your finger.
They can't/won't refuse what you send.
If you send something regularly, do not let them bug you.

Answer 3

The first thing to be aware of is you will not be able clean up your credit report after settling a debt unless there's an error in what's reported. With that said, you want a CONTRACT with that collection agency, not a verbal agreement... and you are NOT to give them your bank account information. A collection agency is not going to settle with you with payments. It will have to be a lump sum amount that you pay them (money order) upon receipt of a letter which specifies it is "complete settlement for the debt" You will not able to settle a debt with an offer to pay weekly or monthly. Offer them what you can afford to pay in a lump sum, get it agreed in writing, and then you wait seven years for it to fall off your record. You may offer half and they may say 75% ... be upfront about your finances. If you are near bankruptcy, tell them. Remember they can always garnish your wages and get the full amount so don't offer to do what you can't do. They sorta have the upper hand in alot of cases. Again... no verbal agreements and never give your bank account information to them.

Answer 4

You can tell them that is all you can afford to pay them unless they want to wait until you can save enough money. They do buy these amounts at a fraction of the original amount and do their best to collect as much as they can for profit. Offer them half as payoff and see what they say. If they will not settle then tell them you can't pay it until you save the money. Screen you're calls and don't be intimidated by then hounding you.

Answer 5

You can offer them anything you want as long as you're willing to give them what you offered.

They do buy debts at discount or in some cases work at a commission. They will accept less the more they suspect you can't really pay more.

Act really poor.

Answer 6

No people at collection agencies are d**ks and I really ond think they will take less than the amount they are collecting they can also charge you fees and add to your debt. I have dealt with an agency once before and they were jerks.

Answer 7

I would offer them about half if and only if they take it off all your credit reports. Medical bill are hard to collect and are not very important to other creditors. think the reason is that it would be easy to claim you were not treated correctly.

Answer 8

Make the offer and stick to it. But if they accept it get it in writing before making any payments.

Otherwise they will resell the remaining debt and you will start over again from scratch.

Answer 9

Everything is negotiable. Collection agency does not make money until they get paid from you.

Answer 10

A medical debt, is services rendered, they can't take it back, if you send them a dollar a week they will take it, and how can they put you on the bad credit list if your there already, therefor don't worry take your time.