Advertiser Disclosure

How To Negotiate With Debt Collectors

Home > Credit > Debt Collection Agencies and Your Rights > How To Negotiate With Debt Collectors

With President Biden declaring an end to pandemic emergency provisions effective May 11, and states and companies already having rescinded most of their debt collections suspensions, debt collectors are totally back in business.

If you are among the roughly 64 million Americans whose accounts are in collections, you know the misery of being contacted by debt collectors. Those who only lately have slipped behind as part of Americans pushing total personal debt past a record-high $17 trillion, brace yourself for unpleasant news.

But no matter what your debt-in-arrears status — veteran or newcomer — if you’re behind the 8-ball with collections agencies, take a deep breath and know this: There are ways to deal with debt collectors, up to and including negotiating a reduction on the amount you owe.

What To Do When a Debt Collection Agency Contacts You

The first three things to do — really, what not to do — when you’re contacted by a debt collector are, in order:

  • Do not panic.
  • Do not ignore the contact. (Attempting to ghost a debt collector is a recipe for heartache.)
  • Do not, on the spot, promise to send money. (No, not even if you can afford it.)

“Ignoring collection notices is not advisable,” says Jonathan Merry, CEO and founder of Moneyzine. “Don’t be an ostrich. Burying your head and ignoring dunning notices is not the smartest thing to do. It’s important to address the situation and take action.”

Begin by stepping back and taking stock of your situation, says Boise, Idaho-based debt-relief coach, Michael Bovee. “What is it about the debt collector you want to do? What is your goal?

“Look underneath to see what else is there, so you can try to develop a strategy.”

Your first task as an alert, informed consumer is to establish that the debt is yours and is legitimate. This requires a series of steps.

  • Ask the collector for information about the agency’s name, professional license number (if required by your state) and contact information.
  • Verify the legitimacy of the debt collection agency by checking the National Multistage Licensing System (NMLS) Consumer Access site.
  • Ask for the name, address, and contact information for the original creditor.
  • Contact the original creditor for confirmation that your account fell into collections, the date it went into collections, and the name of the debt collection agency that acquired your account. To confirm the status of your account and the amount of debt, request a debt validation notice, as required by the Fair Debt Collection Practices Act.
  • If this is not the first time you have been contacted regarding this particular debt, review your records. If this is the first contact, be certain to note and save the details, including contemporaneous notes, information about phone conversations (not just what was discussed, but the dates, times, and how long you were on the phone), emails, as well as texts and/or messages via social media.

1. Understand the Debt

You can’t negotiate effectively without knowing where you stand. Begin by learning the big picture. (Take good notes; you’ll want to have an accurate record to guide you once you’re ready to negotiate.) Find out these three things:

  • The full amount owed, exactly.
  • To whom it is owed, including the address and other contact information.
  • When the debt became delinquent.

You’re not asking for any favors. By law, the debt collector must provide this information within five days of contacting you.

This also would also be a good time to request free copies of your credit report from the three major credit bureaus (Experian, TransUnion, Equifax). Compare those records with the information received from the debt collector; errors are common.

2. Establish Your Negotiation Terms

If your due diligence verifies the debt is yours and has been accurately reported, you can begin to make a negotiation plan.

Remember, we’re not ducking the debt collector. This does not mean you’ll simply dive in with high hopes and promises you cannot keep. Being honest with yourself about your available resources is the first step in negotiating the best debt settlement. Being honest with the debt collector will help if your well-laid settlement hits a snag down the road.

“Proven strategies for negotiating with debt collectors include being well-prepared, staying calm and respectful, and being persistent in your efforts to find a mutually agreeable solution,” retired financial planner-turned-financial coach Michael Ryan said.

Begin this scenario of all-around honesty and respect by creating a budget, or giving your existing budget a hard-nosed reevaluation.

Partial Repayments

Sometimes, the process of creating (or amending) a budget and reviewing the household finances reveals a stash of cash (that isn’t your emergency fund) that could be offered in exchange for settling the debt.

Now you’re negotiating.

“The first thing you do is act in your own best interest,” says Shai Goldstein, chief of Boca Raton, Fla.-based A2Z Filings who also oversees a nonprofit foundation devoted to financial literacy. “What are you willing to give? … Find a number you’re comfortable with and say, “this is what I can afford to give you,” period. They can take or leave it, it’s your choice and not theirs.”

Oftentimes, debt collectors will agree to accept as payment-in-full a lump-sum amount that is only a fraction of the total debt.

“Offering a lump-sum payment can have advantages, such as potentially securing a larger discount on the total debt amount,” financial coach Ryan says. “It also allows you to settle the debt in one go, relieving you of future payment obligations.”

Also, just because you have $5,000 in a savings account and the debt in question is $6,500, you don’t have to offer the entire $5,000 up front, or even tell the debt collector how much you have. Start low, offering perhaps 20%.

Goldstein also recommends asking for the agency’s manager, who will be in a better position to negotiate.

Payment Plans

Consumers who lack disposable savings or readily convertible assets, but who can squeeze a few dollars out of their budgets, may be able to persuade the debt collector to implement an affordable payment plan.

However, your strategy will be to negotiate the total amount that’s to be repaid without mentioning a payment plan. Again, start low. Once the payoff figure is established, then ask about a paying by installments.

“If you decide to choose a payment plan,” Goldstein says, “you’re in total control of the terms, not the collector … and they have the right to accept or decline.”

If your proposal is declined and it truly is the best you can do, Goldstein recommends hanging up, waiting a few days, and calling again. “You may have better luck with a new person on the other end of the line,” he says.

3. Speak to the Debt Collection Agency

Only when you have determined your preferred strategy — lump sum, payment plan, or some combination — should you contact the debt collection agency. While it’s possible to conduct negotiations via email, text message, or even using the agency’s website chat tool (each of which creates a written record), you also can have an actual conversation.

When talking with a debt collector, Bovee says, “the consumer needs to be focused on their hardship, their financial story, because they’re gonna be asked more than once, they might have to repeat it to different people, even a supervisor.”

Whatever the method, use this opportunity to outline your proposal for settling the debt. Remember, start low. There are no guarantees, but sometimes debt collectors will accept a third or less and still stamp the debt “paid in full” or “paid as agreed.”

4. Get the Deal in Writing

We’ve already established that you will be jotting down and preserving contemporaneous notes of any conversations with debt collectors. You’ll also be saving emails, SMS messages, and/or texts.

Additionally, when you and the debt collector have agreed to a plan or a payoff amount, make certain the arrangement is confirmed in writing.

Demand, also in writing, that the debt collector remove anything negative on your credit report related to the debt. This, Goldstein says, is non-negotiable, no clean slate, no payment.

5. Make Your Payments as Scheduled

Once the negotiation is complete and confirmed, it is imperative that you keep your end of the bargain. Make the payment (lump sum or first installment) by the agreed-upon date, and in the agreed-upon fashion — check, money order, or direct bank debit.

Only an unscrupulous debt collector would suggest you send a post-dated check, or request bank account information. Do not comply with those requests.

What Are Your Rights and Protections?

Consumers are protected from abusive, deceptive, and unfair debt collections antics by the federal Fair Debt Collection Practices Act. Among the provisions of the FDCPA:

  • Limitations on when debt collectors may call (8 a.m.-9 p.m. local time).
  • Debt collectors may be barred from contacted you at your workplace.
  • You can make a written request that debt collectors stop calling and communicate by other methods.
  • Debt collectors may contact friends, relatives, or your employer to ask for your phone number or where you live, but they cannot discuss your debt.
  • Debt collectors are barred from harassment that includes profane, abusive, or threatening language.

How Much Will a Debt Collector Settle For?

We have reached the part of the process that holds the most intrigue. How much — or how little — of the total will satisfy a debt collector?

The inconvenient answers are (a) no one knows and (b) it depends.

Debt collection agencies come in a variety of flavors. Some are employed by the original creditor (first-party). Some are external agencies, including law firms, hired by the creditor (third-party) and earn commissions or fees for the amounts recovered. Some buy debts outright, oftentimes for pennies on the dollar.

Because each has a different stake in the outcome of its negotiations with debtors, each has a different amount for which it is willing to settle. Some will hang tough until they’ve recovered 75% or more of the debt. Others may negotiate down to 33%. You’re within your rights to ask what sort of agency is contacting you.

Explain that all debt collection agencies are different, and the amount they will settle for will therefore also differ. Some will only settle for 75-80% of the total amount; others will settle for as a little as 33%.

Looking for a place to set the bar? The American Fair Credit Counsel reports the average settlement amount is 48% of the balance.

Again, start low, knowing the debt collector will start high. With the evidence of your budget at your elbow, be prepared to describe the reasons you’re unable to be squeezed for anything close the full amount. The debt collector will have your financial information from the credit agencies, but that doesn’t mean the agency knows what’s happening in your financial life right now.

Alternatives if You Can’t Afford To Pay Your Debt

One brutal possibility: A consumer may not be able to negotiate any sort of affordable resolution. If that’s the case, remain calm; there are alternatives to consider.

  • Debt settlement is a process that takes the negotiating out of your hands, shifting the burden to professionals who do it for a living.
  • Debt management plans also enlist professionals who intercede on your behalf, negotiating with creditors to reduce interest charges, late fees, and even existing balances. You still pay the full amount, but in an affordable arrangement. DMP enrollees make a single, monthly payment and are out of debt in 3-5 years.
  • Bankruptcy is the choice of last resort for consumers who are drowning in debt and for whom debt settlement and debt management plans are not feasible.

Get Help From a Credit Counselor

When households or individuals are faced with overwhelming amounts of debt, calm decision-making can be the first casualty. What should you do when you don’t know what to do?

Getting professional help is never a bad idea. Luckily, nonprofit credit counseling is no more than a mouse click or a phone call away. As experts in personal finance, household debt analysis, and budgeting, a nonprofit credit counselor can serve as a neutral coach guiding you toward the best solution for your financial distress.

With a nonprofit credit counselor in your corner, soon enough, you won’t have to be reminded to breathe easy.

About The Author

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].


  1. Carther, A., Quakenbush, C., McKernan, S. (2022, March 21) Collections Fell during the Pandemic to 64 Million. Retrieved from
  2. Wallace, A. (2023, May 15) Americans’ debt surpasses $17 trillion for the first time. Retrieved from
  3. N.A. (2019, March 29) What is the best way to negotiate a settlement with a debt collector?
  4. Pressler, A. (2022, August 19) Text Messages From Debt Collectormarmms? Not in My Backyard! Retrieved from
  5. N.A. (ND) What is a Debt Collector? Retrieved from