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 Caitlin Wood
Last Updated September 9, 2014

Debt collectors are seen as these scary untouchable people who must be obeyed no matter what, but the truth of the matter is that they can be negotiated with and shouldn’t be feared. Don’t trust another company to negotiate with your debt collector on your behalf because it’s possible for you to do it yourself. It might be a little scary and it might seem impossible, but it’s definitely possible and could potentially save you a lot of money in the long run. Here are our top 6 tips for successfully negotiating with your debt collector.

Be Prepared

If you want to negotiate with your debt collector then you absolutely need to be prepared and have a pretty good understanding of your current financial situation. You need to know what your monthly income is, what your monthly expenses are and any other debts you might have. This is important because you need to know what you can afford to pay to your debt collector either each month or in a lump sum. Make a budget so that you can clearly see what amount of your income is left over after all your expenses are paid. Having an exact number in your head will help you negotiate with your debt collector so that you won’t agree to make a payment that you can’t afford.

Grow a Thick Skin

This might seem like an impossible thing to do it could be your most effective tool when negotiating with your collector. There are laws that prevent debt collectors from being verbally abusive towards you in an obvious way but they are also not going to be nice to you. Debt collectors are paid to get the money you owe so expect them to do anything and everything, including insulting you and your financial situation. Being mean is a part of a debt collector’s strategy; they want to shame you into paying them and will call you names like “deadbeat” and “useless”, stand up for yourself and try as hard as you can to not take it personally.

Learn about the Statute of Limitations

In Canada each Provincial Government and the Federal Government have their own laws that govern the statute of limitations on debt collections. This means that if unsecured debt is not paid back in a certain time limit then legal action can’t be taken. It’s important that you research the statute of limitations concerning debt collections for the province you live in. If the time limit is over then you might not have to pay your debt collector.

Don’t Make Partial Payments

While making a partial payment might seem like a good idea it can in the long run hinder your debt repayment process. If you negotiate with your debt collector to make a partial payment it can restart the time period in which you can be sued and the length of time the “black mark” shows on your credit report. It’s important that you seek legal help before you decide to make a partial payment, being informed on the potential risks and consequences is your best bet.

Haggle

You might not think that haggling is an option for you when dealing with a debt collector, but in reality it’s one of your best options when trying to settle for less. Don’t forget that you debt has been sold to a collections agency which is now trying to make even more money from you so it’s very likely that they have inflated your balance. Make sure you know the actual amount you owe and don’t give in to their first offer.

Your debt collector will probably try to offer you monthly payments, while this offer will sound more manageable to you, don’t accept. What you should do is try to negotiate one large payment, this way you’ll probably be able to get a much larger discount off your original balance. A debt collector gets paid on commission so they really want you to pay them as soon as possible, which makes them more willing to negotiate.

If you really want to guarantee a successful negotiation with your debt collector then contact them at the end of the month. Debt collectors usually have monthly quotas that they need to fill, therefore at the end of the month they will probably be more willing to settle your debt if it means they’ll make their quota.

Get Everything in Writing

If you’re going to settle then you absolutely need to get everything in writing. If you approve a repayment plan that you debt collector suggests then you also should get it in writing. Make sure you don’t make any payments or give the collections agency any money before you receive, what you agreed to, in writing. Finally, make sure your agreement (that you have in writing) very clearing says that once you make your payment you do not owe the collections agency any more money.

Debt collectors are never a pleasure to deal with; they want your money and will do anything to get it. But, if you follow our tips to negotiating with your debt collector you’ll be able to successfully settle your debt for less than you actually owe and make sure you’re never bothered by them again.


Rating of 5/5 based on 26 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

Earn An Extra 15% Cash Back

Earn An Extra 15% Cash Back
HOT!

Apply for a Tangerine credit card by December 31, 2021, and earn an extra 15% back (up to $150).*

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest

goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...

Read Post
Locator
Find The Best Rate
In Your Region
OR
Best Personal Loan Provider by Greedy Rates
Icon

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.