Last week I discussed what you needed to do to negotiate a deal with your creditors, this week I’m going to dive into the do it yourself debt settlement tactics you are going to need to contact a collection agency.

You might also be wondering what the difference between calling your creditors versus calling a collection agency, and in two words, a lot.  Collection agencies will at times not be afraid to use more hard core and at times illegal tactics to get you to pay up on your debts.

So, can you handle the truth, if so lets get started?

How Collection Agencies Work

Collection companies are used by creditors when a debt has been deemed unpaid for a certain period of time at which time the debt is handed over to a collection agency.  The debt is still owned by the creditor but the CA is in charge of collecting the debt now.

If you are getting calls from a collection agency you should know your rights when it comes to them contacting you.  Anything from using threats, false claims, to calling you at inappropriate hours can qualify as harassment.  If you would like to know more about your rights check out the FTC’s website.

How To Negotiate With Collection Agencies

If you owe a debt you should first talk to the CA and discuss the situation with them.  Talking to them in a rational tone will make things go a lot smoother rather than avoiding them.  This will only make things worse and could lead to unnecessary lawsuits.

However don’t give into them by giving up your financial information.  Request that all debt be validated.  To do this you need to send them a letter that ask for proof that you still owe on the debt.  You can check out a sample letter here.

Once you know that the debt is yours ask them to give you some time to pay off your debt.  Discuss a payment plan that is fair and equal.  Don’t let them talk you into something that you cannot do.  This will only strain the situation.  Don’t be afraid to have some thick skin here and demand some time to pay the debts.

If you do agree on a plan ask them to send you a statement in writing to back you up just in case they don’t hold to their promise.  I would also consider recording the call with them to ensure the proper communication between both parties.

Recording the call holds the collection agent to a hire standard.  If they would happen to threaten you in any way you would have all the evidence you need to push a lawsuit on them.

Also let the collection agent know that you are recording them even if you don’t. It’s just one simple trick you can use to keep the CA in line.

However, their may be a case were you have already paid off the debt and collection agency is requesting payment.  In this case you can ask for a cease and desist.

To do this you have to dispute the debt owed within 30 days of receiving notice and send a dispute letter along with proof of the debt already being paid off.

The same would also hold true if collection agency contacted you about a debt that was discharged through bankruptcy.  In this case though you will have to send a cease and desist order along with a copy of your discharge statement from your bankruptcy showing the debt had already been cleared off.

Finally, if a collection agency calls you several years after the fact and claims that you have not paid a debt yet they may not be able to take any legal action against you.  This all depends your states expiration period also know as your statue of limitations, were a CA will not have the right to take action against you after a certain period of time but each states SOL is different.

However, I have one word of caution to tell you, what ever you do don’t pay the collection agency anything.  If you do this the collection agency will have the full right to pursue you for the payment.

To stop the collection calls send the CA a letter that the Statue of limitation has expired and that they are no longer legally allowed calling you to pursue the debt.  Here is a sample letter to help you out.


Nobody said the do it yourself debt settlement route was going to be easy.  If so feel free to ask any questions you need in the comments area below.


  1. Hello,
    I have a problem and no one seems to be able, or willing, to help me or at least answer my questions. I have an old debt form another state (Date of last activity June 2005) that I was contacted about three months ago (Nov. 2010). To buy myself some time I sent them a letter of verification(Dec 2010). They sent me the verification and I have since reviewed it (Feb. 2011). Now, if you do the math this debts SOL is about to run out. Four more months and I could just send them a SOL letter and be done with it. The SOL where the original credit card was opened is 4 years and the SOL where I’m at is 6 years. What is my best course of action here? Any help is MUCH appretiated.

    Thank you!

  2. I am a guarantor on a auto loan that went bad and just learned of if 5 years later. The vehicle was repossesed and sold at auction but I never learned of this until it went to collection. In fact, I never was informed it was going to collection. The creditor is seeking payment for the vehicle but has not told me what I owe, why it went to collection without notifying me and didn’t give me the opportunity to sell the vehicle myself and pay them the difference. FYI, the original agreement was signed by my then existing S-Corporation and the loand docs has both me (as a signer) and the Corporation as the entity responsible for the loan. The S-Corp has been disolved since I believed the debt was being serviced by the defaulting party who has since declared bankruptsy. What are the best options for this situation?

  3. I would not pay them! I’ve heard if they get you to pay on deals like this you may end up having to pay the debt entirerly. You may want to ask a lawyer as well.

  4. my son allegedly owes a Chase First Card that was stolen years ago and now in collection. The credit line was $300.00 now, fours years later, $1400.00 and ruined credit and a jugement. He i s unemployed college student. help

  5. mary ann migallen says:

    please husbands ex wife use a credit card with their joint account..they are 9 years divorce and my husband is not really aware that she is still using the credit card if only found out when the ex-wife is not paying the debt amounting to $18,000.00 last month. the collection agency is bothering us..the ex-wife can’t pay anymore as she was comatose right now and can’t pay..Please help..what is the best thing to do..we are not aware of all this expenses… us….

  6. Mary Ann,
    I’m sorry to hear about your situation. I wish I could give you a simple answer to this problem. Here are a couple of things you can do. First off, look to see if the card has been canceled by contacting the credit card company so no more debt can be racked up. Next, you want to look into doing a credit freeze so no one can access his credit or open an account of any type. Finally, contact the creditor and explain your situation they may be able to negotiate a settlement. To solve this issue you may have to higher an attorney who be able to help you solve this issue. I know this may not be what you want to hear but it may be your only option.

  7. Hello,
    My ex husband and I had a second mortgage for $130.00 on a home that was forclosed on in Arizona in 2008. While I knew about the forclosure I thought the 2nd was also part of the forclosure as well. I have not heeard anything until now Oct 2011. I was contacted by a third party for an amount that is now $146,000 because of interest. I explained that the home was forclosed on in 2008. He said it didn’t matter that I was responsible for the debt and the interest as well.I contacted the back in which the loan was hel and they told me they had originally closed it out in August of 2008. Can they still come after me after 3 years and with the interest?

  8. Paul Crandall says:

    I am the court appointed administrator of the estate of a long time friend who passed away in Northern California on March 6, 2011. He was found alive but unconcious in his home. An ambulance was summond by neighbors, he was transported 20 miles to a hospital and passed away two days later. No written verbal or contract agreement was made for the ambulance service.

    In February 2012 the beneficiaries of the estate elected me to Adminitrator the estate. During the last year the ambulance company had turned the $2050.00 debt over to a collection agancy. As the Administrstor, I received a letter on March 6 from the collection agency who had added $220.00 to the debt in interest. I would like to negoiate the debt down, be reasonable and the estate is not a wealthy one as the decedent was on a modest pension.

    What would be a reasonable amount be as a point of negoiations.

    Very Best Regards,

    Paul Crandall

  9. Paul,

    Sorry to hear about the situation. The way this situation sounds to me you are on the hook for $2260 of your friends business. However this doesn’t sound like your debt. What I mean is if your name is not on the debt don’t pay it. If you make even one payment to someone else’s debt even though it isn’t your debt you now become liable for something that isn’t even yours.

    If this is your debt, negotiating against a collection company is going to be very difficult to do. On top of that if you do end up negotiating a portion of the debt it will end up effecting your credit and and debt that is not paid will require you to pay taxes on. My suggestion to pay the full debt if it is yours.


  10. I am finally in a position to pay lump sum amounts to my credit card debt; However most of them have been turned over to Collection Agencies. Once the debt has been turned over to CAs what are the odds of getting a debt settlement in a lump sum amount? And what percentage of the debt should I offer?

  11. shawn siders says:

    I owe 2400.oo to att cell phone got collection agencie letter to settle for 874.00 can I get them to take less


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