How do I Negotiate Debt Payoff?

Debt negotiation takes careful planning and preparation.
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Whether the economy has made it worse for your financial situation or if you are trying to get rid of some past debt, you can successfully negotiate a payoff with your debtor if done the right way. Some agents may try to intimidate you, but as long as you have done your research and know your rights, you can benefit from the process by getting this debt off of your shoulders and updated on your credit report.

Step 1

Determine your current financial situation. Knowing this information ahead of time helps you understand what you can afford prior to any negotiation. Gather all of your income statements and records of your expenditures. Be detailed when listing this information so that you know what can be reduced or eliminated and what items have absolutely no room for adjustment.

Step 2

Contact your creditor or collection agency and obtain as much information as possible. This information includes the name and address of the agency, the name and address of the original creditor, the name and contact information for the specific collector you are speaking with and the amount of money that you might owe. Don't confirm any debt at this point until you know that this amount is correct.

Step 3

Ask the creditor or collection agency for a debt verification letter. This letter provides you with the name of the original creditor, the amount of debt that is purportedly owed and instructions on what to do if you believe the debt is not yours. You have 30 days from the date you receive this letter to dispute any errors.

Step 4

Investigate the statute of limitations in your state if the debt is yours. If the statute of limitations has passed, you have the upper hand when it comes to negotiating what you can pay. This is because they can no longer garnish your wages. Be aware that some debts have no statute of limitations; this includes student loans.

Step 5

Offer a settlement amount that is feasible for you to pay in one lump sum. Your offer is more likely to be accepted if you can pay it in one payment instead of a series of monthly payments. Before paying the settlement amount, obtain the agreement in writing from the debtor that outlines all terms that you have negotiated and make sure that the unpaid portion is not sold to another collection agency.

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