The debt collector's call may often hit us with the overwhelming momentum of a free falling sack of potatoes, or at least that is how it can feel.

That is its purpose of course, to jolt the victim into a sense of insecurity in the hope that this will make them pay up.

If you ever have to deal with debt collectors, do not let them play their game. You are a person and should expect to be treated as such, establish this early on. If you don't let yourself get bullied, two thirds of the battle will have been won. The rest is mostly just a question of following some negotiation rules, which will make negotiating with debt collectors a lot easier.

Understanding Your Debt and Debt Collection Rights

When you are negotiating with debt collectors, it is absolutely critical that you are one hundred and ten percent clear about several things.

You must know exactly what you owe, what your options are, and what can and cannot happen to you.

You have rights and debt collectors have limitations, which you must use to your advantage. However, the rules do vary from one US state to another.

This is why being well informed is key to controlling the process of negotiating with debt collectors.

So be as knowledgeable about your debt as possible. A great source of reliable legal advice is your state attorney general, who can also put you in touch with the state’s consumer protection agency, two institutions that are usually very closely linked.

Here is a government list of all the State Attorney Generals, state by state. Also, here’s the directory of all the State Consumer Protection Offices, again state by state. Both these resources can be very useful when having to deal with debt collection.

Asking For a Notice of the Debt

Speak With the Creditor

Negotiating With Debt Collectors

When dealing with a debt collector, it is important to be aware of what you and the debt collection agencies, can and cannot do. Debt collectors will often try to push and bend the regulations, especially if you are unable to defend your legal rights.

However, if you already know what is the worst thing they can do, the debt collector will not be able to use these tactics and you can negotiate with greater ease. For this reason some people seek some form of representation at this point, although if you read up and can hold your ground, you can negotiate your own way through the process.

At all times during the process of negotiating with debt collectors, avoid lying. If it comes out later it could give the debt collector's grounds to sue you, and coping with debt collection then will be a lot harder.

To negotiate, you will have to honestly and realistically calculate how much you can repay each month. When working out the amount, remember to account for all your needs, your family's needs and all other basic expenses. Any other bills that you receive will still need to be paid for, so do not allow the debt collector to make you prioritize their debt. Remember, they want to be paid and will be prepared to negotiate the best deal they believe they can get... for themselves.

The debt collection agency may well have paid a small fraction of the total amount when buying your debt. This means that they can probably make a large profit even if you don't pay them in full, so you may want to consider negotiating some sort of lump sum payment. You could get up to a fifty percent reduction if they are willing to agree on this quick return. There are, however, positive and negative sides to settlements, which must be considered in each particular case to decide if settling is right for you.

Debt Settlements

By settling, you will clear that particular debt and successfully fend off the debt collectors, but there may be other negative effects that must also be considered. Negative effects include having to pay tax on the "forgiven" part of the debt, which will be considered income by the IRS unless it is under $600, and a "settled" note showing on your credit rating which would tell any future creditors that you have failed to pay back in the past.

So if you intend to use credit in the future, you must either find a different way of paying off the debt, or ask the creditor or debt collection agency to show your debt as "Paid In Full" on your credit report.

These down sides make it critical to put some thought into taking this step before you make the decision.

If both you and your creditors agree on a partial settlement to pay off the debt, you will have to make sure that you get a written acknowledgment from your creditor. This basically involves asking them to sign a settlement proposal, in which they promise to accept the agreed settlement as payment for the FULL AMOUNT of the debt.

This is very important, as it will be legal proof of your debt payment, and you will need it if they try to recover the rest of the debt at a later date. Ask for written confirmation that your account has been closed, and look at your credit report around two months later to check that it shows as "closed," "settled" or "paid as agreed".

If you are negotiating the settlement yourself, you may wish to use a debt settlement agreement template, to avoid leaving loopholes. A couple of companies that offer these templates are, USLegalForms and LegalZoom.

The Final Word On How To Deal With Debt Collectors

1. Do your homework so you understand exactly what you owe and what your legal rights are.
2. Negotiate according to your needs and possibilities, and be as methodical as you can when dealing with your creditors.
3. Put everything in writing to protect yourself in the future.

Follow these guidelines and you will be able to control your debt situation much more effectively and to your advantage. Hopefully now you how hot to negotiate with debt collectors more effectively.