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Negotiate with a Collection Agency?

The answer to this question depends upon whom you are dealing with. If you are dealing with an actual credit card company (such as Capital One) then you may want to consider negotiating with them. If you are dealing with a collection agency, then I would NEVER negotiate with them (at least not until they could absolutely prove their case, or unless you have a very unique circumstance).

Original creditors are much different than collection agencies when it comes to evidence and proof regarding your credit account. In Pennsylvania, standards have been established on credit card cases whereby certain documents are needed as evidence in a lawsuit that is based upon a credit account. In my experience, and I guess as common sense would tell you, original creditors are more likely to come up with the proper documentation than collection agencies are. Again, in my experience, collection agencies rarely can come up with all of the documentation necessary to prevail in a court of law against you.

In that regard, my suggestion is to not negotiate with them. (Caveat – There are a few times when negotiation with a collection agency is beneficial; 1) if the amount alleged due and owing is relatively small, perhaps $1000 or less.  In that instance it may be cost effective to just “make it go away”; 2) if they are offering a cost effective deal to you, i.e. if you owe $4000 and they offer to settle for $500; get that one in writing, of course).

Let’s talk about negotiation in general terms now. In my experience, I have found that it is much easier to negotiate if you can make a lump sum settlement. For instance, if you owe $5000 on a certain credit account, you may be able to negotiate a settlement of 50% to 60% of the balance, IF you can pay that amount in full.

On the other hand, if you need to make payments, getting a reduction in the amount owed is very difficult in most instances. The only meaningful reduction that I see  when negotiating monthly payments occurs when the monthly payments are large (i.e. if you owe $25,000 and can pay $2000 per month). In a situation where you owe $5000 and want to pay $100 per month, there likely will not be a reduction in the total amount due under that scenario.

If you have a debt settlement question please do not hesitate to contact my office.  Please contact us before you contact the creditor.  412-823-8003 or send an email to Attorney Greg Artim

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