Can You Get A Debt Collector To Settle For Less Than You Owe?

Can You Get A Debt Collector To Settle For Less Than You Owe?

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated December 22, 2022

If you have debt that’s in collections, you may be inundated with pestering phone calls from debt collectors looking to collect outstanding payments. 

But what if you can’t come up with the money for full repayment? Is it possible to negotiate with the debt collector for an amount that’s less than what you originally owed?

Let’s go into more detail about how you may be able to settle for a reduced amount with a collection agency.

Can You Ask A Collection Agency To Settle For Less? 

Yes, you can request to have your debt reduced. Collection agencies are often willing to negotiate with consumers and reduce payments. These companies often prefer to settle several debts for a lower amount than deal with the same case for an extended period of time. 

If you choose to negotiate with the collection agency, make sure you’ve crunched the numbers to come up with payments that you can afford. 

If the collection agency agrees with your proposed new payment, you should be able to continue making payments to pay down your debt. But if you still can’t meet the new payment you’ve negotiated, you’ll be in the same position you were in before.  

How Low Can You Settle A Debt With A Debt Collector? 

Reducing the interest rate or the overall debt amount can bring your payments down just enough for you to cover them in full every billing cycle. Inform the collection agency that you can’t pay the full debt amount based on your current finances, then propose an amount that you can afford. 

Leave Room For A Counteroffer

Even better, offer just under what you expect to pay. That way, you have some wiggle room for a counteroffer. 

If the debt collector counters your offer, you can either accept it if you’re able to afford the new amount or continue negotiating. If you’re able to reach a deal with the debt collector, make sure you get a written promise that they will no longer try to contact you once the debt is repaid. 

You can also have a Licensed Insolvency Trustee (LIT) negotiate on your behalf. Your trustee can also help you determine how much you can afford before the negotiation process begins. 

Ways To Negotiate A Lower Debt Payment 

When negotiating with the collection agency, consider one of the following ways to reduce your debt:

Partial Repayment

As mentioned earlier, consider starting your negotiations low to give yourself some space for counteroffers. For instance, if you can comfortably afford to pay back 50% of what you owe, offer 30% and they may counter with 45% or 50%.

New Payment Plan

Take some time to come up with a monthly budget that accurately reflects your current finances. Figure out how much you think you could dedicate toward making specific debt payments and propose your new payment plan to the debt collector. 

Find out if a debt collector can charge you extra fees.

Tips On How To Negotiate With A Debt Collector

It doesn’t hurt to ask the collection agency to reduce your overall debt amount, especially if you can argue a strong case and have already taken some time to come up with a new payment plan that works with your budget. If you decide to take this route, consider the following tips to improve your odds: 

Know How Much You Can Afford 

You may be able to sway the odds in your favour if you go into the negotiations with a firm dollar figure in mind after considering your current finances. Take some time to calculate what you can afford by going through your finances and determining how much is needed each month to cover your expenses. Go through your list and see if there’s anything you can go without, and consider getting rid of these unnecessary expenses.

With a detailed budget and a firm dollar figure, you’re ready to present your offer to the debt collector.

Know Your Story

When speaking with the debt collector, be clear and concise about your situation and your proposition. Let them know what’s preventing you from keeping up with your payments and what you plan to do to get back on track without a long and drawn-out story. Get to the point and be as truthful as you can be about your situation.   

Get Written Proof Of Everything

Everything should be accurately documented when speaking with your debt collector and dealing with your outstanding debt:

Take Detailed Notes

When speaking with a debt collector, jot down notes that summarize the conversation. Make sure you include details such as the person’s name, when the call took place, how long the call was, and the subject matter of the conversation. 

Save Your Bills 

Don’t throw all your bills out. Instead, keep them and consider how you’d like to deal with the debt. Get a written agreement. Don’t rely on verbal agreements. Instead, get everything in writing in case you need proof to back your case. 

Limit What You Tell Your Debt Collector

Don’t give the debt collector more information than required, especially if the information is potentially incriminating. 

For instance, if you give too many details about how you incurred all your debt, the agent might make unfair and inaccurate assumptions about you and your spending habits and be less willing to negotiate. Further, don’t give the debt collector any additional banking information, and don’t confirm anything they assume about you and your financial situation, even if it’s true. 

What Happens If I Can’t Pay My Debt Collectors?

If you’re behind on your current debt payments, your creditors may eventually enlist the services of a collection agency to collect the money you owe. Thankfully, there are ways to put a stop to these calls:

Speak To A Credit Counsellor 

If you can’t come up with a modified payment arrangement and you need help dealing with collection agency calls​, a credit counselling service may help. These non-profit organizations will assign a credit counsellor to you, who will assess your financial situation and suggest a solution that best fits your needs. 

Credit counsellors are experienced in helping consumers handle their debt so that collection calls will eventually stop. There are different options that are available to you depending on your situation, which can range from establishing a budget to debt settlement solutions like consumer proposals and bankruptcy. 

Find Out if Your Debt Is Outside The Statute Of Limitations 

When it comes to debt, there is a statute of limitations that creditors and collection agencies must recognize. If your debt is too old, debt collectors are not allowed to come after you for it. 

The statute of limitations refers to the amount of time a creditor has to take legal action to collect debts owed and ranges from 2 years to 6 years, depending on where you live. Once this time period expires, the creditor no longer has the right to require repayment of the debt.

If your debt is past the statute of limitations, inform the debt collector and respectfully ask that they stop all forms of communication.

Debt Collection FAQs

Can I dispute a debt collection?

Yes, you can argue against debt collection by reaching out to the collection agency. Consider communicating via email so there’s a paper trail you can refer back to if required.  Disputing debt can be beneficial because it can put an end to debt collection calls. By law, collection agencies are not allowed to contact you without your consent following a dispute. 

Will debt collection hurt my credit?

If your debt is already in collections, your credit score may have already taken a hit. If you repay the debt, the collection agency should report your payment to the credit bureaus, but your credit report will likely reflect this debt. The amount of time the debt will remain on your report depends on the severity of the situation and how it was dealt with.  

Can I pay my creditor instead of my debt collector?

If you’re being contacted by a debt collector, that means your original creditor probably already sold your debt to them. If you decide to pay your original creditor directly, the collection agency may not know about it and may continue to pursue you for payment. Instead, pay your debt to the debt collector rather than the creditor.

How does debt collection work?

If you miss bill payments, your debt will be considered delinquent. When this happens, your creditor may sell your debt to a collection agency. The debt collector will first contact you in writing.  If you still don’t pay, the debt collector is legally authorized to begin calling you, though there are rules they must abide by when calling. Debt collectors may reach out to your family or employer if they can’t get a hold of you. 

Final Thoughts

If you can show that you’re serious about repaying your debt and have taken the time to come up with a modified payment plan, the debt collector may be willing to listen. Just be sure to go into the negotiations with a solid arrangement about how much you can realistically pay and how you plan to follow through with your new plan.


Rating of 5/5 based on 28 votes.

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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