How do I approach a collection agency to settle for less.....?

Question

...if they haven't offer. The debt is a school loan and is about $1100. Thanks is advance.

Answer 1

I have to answer your question with a question...If you loaned me $1100.00, how much would you settle for? When you borrow money you owe it! Don't you have any morals? Make payment arrangements and pay your just debt. Paying the debt will teach you a valuable lesson about finances. Offering a settlement will teach you to continue to be irresponsible.

Answer 2

I work for a credit counseling agency so I would like you to listen carefully to what I am going to tell you. I personally dont think there is anything wrong with a settlement but there are some things you need to know.
#.1 ALWAYS get in writing from them that the amt agreed upon pays the debt in full. DO NOT send money until you get that. If you dont, it is your word against theirs and they can and WILL sell the balance to another collection agency.
#2 Please know that it is going to note on the credit report that this debt was settled for less than full balance and it will stay that way for 7 years. This can affect credit in the future.
#3. IF you do settle, please know that they will report the amt you didnt pay to the IRS and you will have to pay taxes on it. You will receive a 1099 for it at the end of the year.

#4 ALWAYS pay with a cashier's check or a money order and keep the proof FOREVER. That way if it were to ever turn up on the credit report in the future, you can dispute it and have it removed.

Answer 3

Hmmm... I don't really have any experience with school loans, but as an attorney, I negotiate debts down for clients all the time. The problem here is that you don't have much leverge - but you can call the agency and tell them that you have a limited amount of money available and numerous creditors and you are trying to divide the funds among them so that everyone gets something. Then ask if they would be willing to take $500 in full settlement of the debt. See if they make a conter-offer. Don't answer any questions about how much you have or who your other creditors are. If they just say "no deal" and don't make a counter-offer, tell them that you are sorry and hang up. If you strike a deal, get a name and address and ask for a confirmation letter. The deal is full and final settlement. If they press for installments, just say that won't work for you.

Answer 4

You are under no legal compunction to deal with a third-party collection agency. If you do so, you are doing so out of choice.

Refer to the Fair Debt Collection Act:
Can you stop a debt collector from contacting you?
You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

The second URL Is for a site by a guy named Ben Dover (no, that's his real name!) where he talks in detail about debt and collectors and such. I highly recommend you spend some time there.

Answer 5

$1100 isn't that much money. If collections takes over the account, it will give you a bad credit rating which you must avoid at all costs. Bad credit will affect being able to get a mortgage, a car loan, financing furniture or anything!! Get a job and pay it off!!

If the loan is already in collections, just ask them what the payout amount is. How much will you have to pay to get the account closed today. Collectors love payouts.

Answer 6

Start ridiculously low, say, $100 and go from there. You can usually settle things for between 25% and 50%.

Keep in mind that a colletion agency is nothing more that someone that bought your loan for pennies on the dollar and is trying to make a profit by getting you to pay the posted amount.

Answer 7

most collection agency's will settle for 3/4 of the debt. but i've gotten away with paying half. just offer what you can pay, and if they dont accept it, tell them you have nothing else to offer at the time being, then call back in a month with the same offer. if its been pending for a while, they'll take what they can get.

Answer 8

make them an offer for half. Tell them your considering bankruptcy (even though youre not) but would really like to avoid it if at all possible, but the only way to do that is if your creditors will work with you on settling. They will want to take your offer because if you file bankruptcy, they get zilch!
another thing. make sure that part of the negotiation is that they delete the negative tradeline off of your credit report completely. get that agreement in writing before you pay anything.

Answer 9

If your debt has already been written off and given to the collection agency, the effect on your credit has already accord. By not responding to their collection attempts they will become more desperate for a settlement and offer you lower and lower write off cost until you receive one you are comfortable with, I would let it ride.

Answer 10

Just ask them if they are willing to give a discount if you pay in full. If they won't, call the company that turned the debt over. They can (if they are willing) pull it back from the collection agency. Good luck.