Step One: Take a Deep Breath…RELAX!


Whenever I get a question about debt, it usually comes with this look of great despair. Listen, you are not the first to get into debt and it is NOT a poor reflection of your character. 


Step Two: Develop the Strongest Weapon


The strongest weapon is a good FICO score, 750 or higher. have an easier time getting their rates reduced and annual fees waived. 


Step Three: Learn Your Rights

Debt collectors can usually sniff out an uninformed consumer, so make sure that you know your rights.   There are a few resources that will help you find about the most current laws that impact you, including the following:


  • The National Consumer Law Center – Call them at 617-542-9595 and ask for a “What You Should Know About Debt Collection” brochure. Their website is  
  • Your State Attorney General’s Office – Many laws pertaining to debt collection differ from state to state; make sure that you know the laws in your state. 
  • The Federal Trade Commission – This site will provide you the rules that the debt collectors must abide by.  The website is  They have a click-thru labeled  “Debt Collection” on its home page; this link will provide many rules that will assist you in becomong more knowledgeable.  


Step Four:  Lay Out a Plan of Attack

Writing out all the debt that you own is a crucial part of laying out your plan. Below is a sample table of the headline categories that you should put together before you begin negotiating:


Company Owed Phone Number Mailing Address Due Date Minimum Due Balance Owed Line of Credit Interest Rate


You can go to and get your credit information to obtain your debt owed.  It is worth repeating that you should go to all three credit bureaus because they more than likely will have different information at each one.  You are now ready to begin the negotiation process.  


Step Five: Play Hardball!  

When negotiating, here are some rules to follow:

  • Your family is always first.  Never let a debt collector talk you into paying a bill that causes you to fall behind in paying for basic necessities for your family.  If it is a choice between appeasing a nagging bill collector and feeding your family or paying your rent, the bill collector will just have to wait.
  • Always offer less than you can afford to pay. Let’s say that you owe $2,000 and after you do your budget you find out that you can afford to pay $1,500…offer to pay less than that amount.  Understand that usually after 6 months, the credit card company will write your debt off before the end of the year so they can declare it as a loss on their income tax.  That being said, if they have sold the debt already, they have sold it for far much less than you owe. Using the same figures, because the bank already has written off the debt for a loss, they might have sold your $2000 debt for as little as $500.  This is why many people are able to settle their debt for half of what they owe. In this case if you offered $1000 to the collection agency they still would make a $500 profit. Always shoot low!  


  • Keep your stories brief. Just think about what it would be like to hear down-on -your-luck stories all day every day. Save your effort of the lengthy explanations and stick to the facts of what you can and can’t afford to pay. 


  • Keep private information private. They are going to try to obtain as much information as possible about you.  The address of your job, the phone number of your mother’s home, the phone number to your significant other, and anything that you offer WILL be used to contact you!  


  • Tape the call if it is allowed in your state.  In most states, you are allowed to secretly tape the phone conversation.  In the other states you are allowed to tape the call with the permission of the other party.  No matter what, you want them to know that the call is being taped, as it will keep them honest.  


  • Keep an accurate record of the call.  Make sure that you make it a point to get the creditors first and last name in such a way that he/she knows that you are taking note of it. 


  • “Paid in full” is better than “settled”.   The debt collector has the ability to remove any negative items from your report, and this should be a part of the agreement. If you weren’t able to get them to budge on terms, try to get them to state on your report “Paid in Full” as opposed to “settled”.  


  • Know WHEN to negotiate.  Debt collectors are paid each month a percentage of the amount of debt they are able to collect. This is the incentive to have them call you so frequently…the more they collect the more they get paid. If you negotiate in the end of the month as opposed to the beginning, the debt collector will be more apt to want to give you a good deal to boost his commission check.


  • Be the squeaky wheel that gets the grease. Many times negotiating depends upon not when you call, but whom you talk to. I have helped many clients by calling two or three times and because the first person was having a bad day they weren’t willing to work with us.  Don’t get discouraged if the first says no, never be afraid to call multiple times, and sometimes it is good to ask for the manager.  


  • Get the agreement in writing before paying a dime.  If the creditors say that they will accept a $250 payment on a $1000 debt make sure that they send it to you in writing.  While they are sending a letter, you send a letter to them as well outlining the full agreement of payment. Yes…you should also send them a letter because you want to have a record of what YOU UNDERSTAND the terms of the new agreement to be and not leave it in the creditors hands in case of they make an error. Send the letter via certified mail so that you can get a delivery confirmation. No matter how much the debt collector pushes and pushes, nothing gets done until the agreement is solidified in writing.  


None of these steps are guaranteed but done together and aggressively they will highly increase your chances of getting a better deal.