How to negotiate with debt collectors

Pile of envelopes with overdue utility bills isolated on white(Getty Images/iStockphoto/artisteer)
Whether you owe a debt or not, getting a phone call from a debt collector is never a pleasant experience.

And it’s one that may be happening more frequently in recent months. The hiatus that some states and companies put on debt collection activities at the height of the pandemic has largely ended, and debt collectors have resumed business as usual.

Nearly 40% of Americans say that debt collectors contact them about once a year, including 14% who report daily contact from collections agencies, according to Symend, a firm that provides technology to debt collectors.

Debt collectors representing a legitimate debt can sue you, but there are steps you can take before the interaction gets to that point. Read on to learn what is a debt collector and how to handle it if you receive a call from one:

Stay Calm

While it can feel unnerving or scary when a debt collector calls, there’s no reason to panic. It’s important to keep a level head during the conversation. If you feel overly emotional — or if it’s simply not a good time to take the call — ask for the debt collector’s contact information so that you can return the call at a better time. But do not ignore the call entirely.

“Deciding not to pay attention to the calls, either because you don’t think you owe a debt or because you’re going through a hard time, or you are embarrassed, that’s the worst thing you can do, if it’s a legitimate debt collector,” Robert Foehl, executive-in-residence for business law and ethics at Ohio University, says.

Understand what a debt collector does

It can help to understand who you’re dealing with and what a private debt collector does.

Typically, debt collectors are private companies or individuals hired on behalf of a creditor, such as a bank or a hospital, to collect a debt that’s gone unpaid for an extended period. Legitimate debt collectors do not make threats or harass those that they contact.

[Read: What Happens if You Don’t Pay Your Debts?]

Ask for documentation

Debt collectors must provide you with a written “validation letter,” which should spell out exactly the value of the debt, to whom they claim you owe it and since when.

In many cases the debt collector could be contacting you in error — more than 37,000 consumers submitted complaints last year that alleged debt collectors had contacted them about debt that was not theirs, according to the Consumer Financial Protection Bureau.

You’ll want to keep documentation on your end as well, taking detailed notes during each phone call.

Know what not to say

During your first call with the debt collector, do not confirm that you owe the debt, even if you believe that you do. Oral confirmation can validate the debt or extend the statute of limitations for collections, Jamie Hopkins, managing partner of wealth solutions at Carson Group, says.

You also should not share any personal information, such as your bank info, Social Security number or credit card data. Fraudsters often impersonate debt collectors to scam consumers out of their money or steal their identity, so it’s important that you verify the person you’re dealing with before providing any such information.

There’s no magic phrase to stop a debt collector but you can ask one to stop contacting you. Keep in mind, however, that even if the communication stops, the debt does not go away.

“All that does is keep the debt collector from contacting you,” Foehl says. “It does not resolve the situation.”

If you’re wondering whether debt collectors can collect from family members, the answer is typically no — unless the family member is a cosigner on the loan. So, you don’t need to worry that cutting off communication with the debt collector will lead them to harass members of your family.

Prepare to negotiate

Most debt collectors don’t expect to be able to collect the full amount owed on a debt. Once you’ve confirmed that the debt is legitimate, you can start negotiating the best way to pay it off. That might mean a reduced upfront payment or a payment plan that works with your budget.

While debt collectors cannot legally threaten you with prison time or garnished wages, some unethical debt collectors might make similar insinuations. So, don’t worry about those type of consequences.

“But debt in collections can impact your credit score, and it’s still an annoyance, so you will have to work on it from a payment standpoint,” Hopkins says.

You may be asking yourself if you should pay the original creditor or the debt collector. In most cases, by the time the debt collector has reached out to you, they’re the ones responsible for the debt. It’s best to negotiate directly with them.

[Survey: Debt Consolidation Pays Off for 69% of Borrowers]

Take action to prevent future debts from going to collections

Sometimes life circumstances cause bills to pile up but there are steps you can take to minimize the chance that you’ll have to deal with debt collectors again in the future. Creating a budget can help you make sure that you’re allocating across all your existing bills so payments don’t fall through the cracks.

You can also start regularly setting aside cash in an emergency fund — where even small amounts add up over time. That way, you’ll have reserves to turn to if an unexpected expense pops up without having to borrow money again.

More from U.S. News

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Household Debt Surges at Fastest Pace Since 2007

How to Manage Your Debt Before a Recession

How to Negotiate with Debt Collectors originally appeared on

Update 06/26/23: This story was published at an earlier date and has been updated with new information.

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