7 Tips for Negotiating with Debt Collectors
Maybe part of this article is me procrastinating on a final I’m supposed to have written already. Still, even if that’s the case, I believe that the following wisdom will serve you well, my friend. Also, I recognize that this article is not written in the typical fashion of this blog, but fuck it. I’m pretty pumped about my negotiations today, and I want to share. So there.
My experience with debt collectors is something that has accrued over time. From being a young girl listening in on her mother’s rampages with customer service to marrying a man who dodged his debts, I’ve picked up a thing or two.
Oh, and let’s not forget my 18 years of experience in customer service. Through my dealings with customers, I’ve recognized that the customers who treat me with respect are the ones I enjoy going above and beyond to serve.
I’ll go above and beyond for any customer because I’m fantastic, but when a customer is a prick, I don’t necessarily have a fun time doing it. So the truth is that your service depends on YOU.
There are two ways to speak to your service worker (be it a service, customer service rep, bartender, management, etc.). The first way is to criticize them until they crumble with fear. The second way is to use a negotiation tactic that is firm, respectful, kind, and considerate.
The second way is preferable because:
a) even if the person on the other line helps you, they are likely to give you a better deal if you weren’t an asshole
b) they are humans, like you
c) it’s fun to be the person who leaves a positive impression on the debt collector.
Note that this has been an effective way to lower my bills, settle debts, and negotiate interest rates. First, however, we will focus on the debt collections department because, well, I had a few wins with them today.
What is their goal?
Before you approach a representative, consider what their goal is. I mean, they tell you right away on the recorded line anyway! The point of the call is to collect a debt. It is their job to collect a debt in a reasonable amount of time for a fair amount. That’s it.
Thus, they are willing to work with you because they want to get the money. If you can offer something that enables the representative to complete their job and help you out, well, that’s a win-win.
What are your parameters?
Decide on your bottom line. What would be your ideal situation? Any good negotiator knows the price point they desire before engaging in a conversation. This both helps you get what you want and leads the representative in the right direction. If they ask, “well, what do you have in mind?” and you respond with, “I don’t know, the best you can do.” They will not offer you the best they can do.
Once you decide what your ideal situation is, it will be essential to offer them less. Although sometimes the representative might agree on the first attempt, most counter the first offer because their job is to get the most amount of money to settle the debt.
Typically, companies I deal with are willing to settle at .30/1.00, which is incredible, but that is not our goal. Instead, our goal is to persuade them to pay at .25/1.00. Thus, it is beneficial to request a settlement of .20/1.00. In other words, if the original balance is $100, I want to offer $20 as a starting point.
Suppose they do accept this — fabulous! If not, they may move somewhere like double that, then you will counter, and it will be a dance until you both agree on a suitable number (somewhere between .25 — .35).
If you would like to enter into a payment plan based on the settlement amount, know that this adds a layer to the negotiation tactics.
Do you want a payment plan?
The representative will typically offer you the option to settle with a lump sum. To reiterate, they want to collect the most amount of money in the least amount of time. Their priority is to close the deal.
Typically, it’s best to talk to a supervisor to work something like this out because it is commonplace to pay settlements in lump sums. We’re not doing that here, though.
Once you connect with the supervisor (if necessary), you mention that you cannot make the lump sum payment, and they will not receive funds from you. So there has to be a commitment from you to hang up with them if they don’t budge.
If this happens, then call back another time and speak to a different representative. You clearly have a desire to pay but need to work with someone compassionate to your needs. Once they arrange the plan, they will tell you it’s a “special circumstance,” but it’s merely common sense.
Would they prefer to collect some of the debtors no debt at all? Some debt, thank you. So, if you’d like to both settle on a smaller amount and enter a payment plan, you can make that happen.
Decide what type of payment plan you’d like to negotiate. For example, if you want a long-term payment plan (say 15 months), they are likely to ask for a higher lump sum. On the other hand, if you are financially comfortable breaking up the payments for less than 5 months, they will be more willing to cut down the lump sum.
Who are you speaking to?
As a reminder, the person you are speaking to is a human with human emotions, so use your super spidey senses to “feel” out the situation. You can quickly hear from the tone of a representative’s voice whether they are flexible. If you talk to someone on a bad day, they will be less willing to work with you. Pay attention to the subtleties of their words — in other words, read between the lines.
You are talking to a human — awesome! How would you talk to someone you just met? You would ask their name, how they’re doing, and make small talk. This is a critical component of this negotiation tactic. If you don’t begin to build a relationship with the person on the other line, they can sense it. Be empathetic and treat them well. If you need to write down their name, please do. It’d be best if you refer to them by name for the rest of the call.
They know your first name, and you should know their name as well. But, hell, they know much more about you than that! People like jokes, small talk and feel they’re cared about. Part of this might be driven by a desire to get what you want, but both of you have this desire.
Why not make it a pleasant experience?
Be Honest
This is not the time to be ashamed or timid about your financial situation. Let’s face it; the economy is shit — primarily due to the quarantine. Be honest about your setbacks and why you are unable to comply 100% with their original ask.
Whatever your reason is, you need to be honest about the struggle and anguish it causes you not to afford to pay your bills. Then, if you can be honest, you can appeal to their empathy.
Another aspect of honesty is transparency about your feelings with a gracious delivery. If they made a comment that frustrated you, then let them know gently. Part of their job is to prod you — it’s a style.
You can acknowledge this with a “hey, I’m sorry, but I’m starting to become frustrated because I feel like you’re not hearing me. I thought that your company had a reputation for their customer service.”
Sure, there’s some manipulation there, but you’d like them to know that their tactic is not working and also cutting short their company’s reputation.
Let them know how important your business is
This one goes more for other bills (such as a cellphone company), but I feel it’s essential to add it to the list. Although you want to be kind, you also want to be firm. Therefore, you have no problem researching companies that are more willing to work with you.
It is more cost-effective for them to retain you as a customer than to attract a new one. If you mention your willingness to leave the company, the representative will likely use their last’ hail mary’ to offer you a deal.
BE FIRM
I said it before, and I’ll repeat it. Be firm until the rep offers a deal you desire. Do not back down until you get a ‘yes.’ This could lead to a circular conversation in which you explain your desire repeatedly in different ways.
However, at some point, you will get through to them. You need patience and a willingness to stick to your goals.
