Tuesday, November 22, 2022
Learn how to negotiate with debt collectors and stop collection calls. Explore effective strategies, repayment options, and professional debt solutions.
Having debt collectors constantly calling you is a stressful and overwhelming situation. While debt collectors have rules they must abide by, that doesn’t stop them from making you feel constant stress and worry. They count on your fear of them to push you into making a quick and sometimes unwise decision.
Negotiating with a debt collector may sound intimidating, but it’s a great way for you to take control of your finances. Collectors are open to negotiation because they’d rather recover some money than none at all. Let’s look at the best ways to negotiate with debt collectors.
Creditors use debt collectors to recover money you owe. Creditors will use debt collectors when you fall behind on payments and they are unsure of your ability to pay.
Creditors will get debt collectors involved after they have tried to collect the money from you themselves. It’s a step no one wants to take. Debt collectors have a specialized role in pursuing overdue accounts and often use more aggressive tactics than the original creditor.
There are a number of ways debt collectors can contact you. They may call or send letters or emails. Their tactics can seem aggressive and stress-inducing to many.
Debt collectors are open to negotiation, though, and you can often try to work out a deal with them.
Having to talk to a debt collector is stressful, especially since they may call at any time or over and over if you don’t answer.
It’s best to be polite but not to give away any more information than you need to.
Don’t give out details about your finances, such as income, bank balance, or your personal assets. Doing so could weaken your negotiating position.
Ensure that their records are accurate and the amount they are asking for is what you owe.
Negotiating your debt may seem intimidating, but this is something debt collectors expect. It’s best to have a clear strategy to begin the negotiation. Here’s some basic things you should do when negotiating.
Work out what is the maximum you would be able to pay each month without too much trouble. The last thing you want is to end up falling behind on something you agreed to yourself.
If you have a monthly amount you know you can pay, say it. This way you can have more control of the negotiation.
Debt collectors want you to make a snap judgment and agree to something quickly. It’s best to come prepared so you don’t agree to something you later discover you can’t pay. This means understanding your full financial position before negotiating.
Click below to learn the statute of limitations for debt where you live.
Learn about the statute of limiations for debtA good starting point is 30% less than what you owe. It leaves room for some negotiation while showing that you’re making a genuine effort to come to an agreement.
You should explain that your offer is something you can afford to pay.
It’s possible the debt collector will accept your first offer, although it’s more likely they will counter it with a higher number. At this point you can suggest a different number somewhere between your first offer and their counterproposal.
Don’t increase your offer impulsively. Remember to stay within the limits of what you can pay monthly. There’s no point in agreeing to something you can’t pay.
Let’s assume you and the debt collector come to an agreement. You should request to have it sent to you in writing. This way you can review all the full terms and ensure it meets what you agreed to on the phone.
If you and the debt collector fail to negotiate an agreement, you still have options, including ones that will stop debt collectors from calling you again.
There are ways to get out of debt even if negotiations with a debt collector fail. One is a consumer proposal, and it has the power to stop debt collectors from ever calling you again.
For a consumer proposal, you must work with a Licensed Insolvency Trustee. You can’t file one on your own.
The Trustee will assess your full financial situation and then negotiate with your creditors on your behalf to lower the amount you owe. A consumer proposal can lower the amount you pay back by up to 80%.
Once a consumer proposal is filed, it issues ‘a stay of proceedings,’ which halts collection efforts taken against you. This means debt collectors must stop contacting you.
It also prevents your wages from being garnished and stops almost all forms of legal action from being taken against you over the debt.
A consumer proposal takes your debts and combines them into one low monthly payment. It also stops interest fees as well, saving you more money over time.
You are required to attend two financial counselling sessions after filing the proposal. Proposals can last up to five years, at the end of which you will be declared debt-free. They’re a common way to get out of debt and avoid bankruptcy.
Bankruptcy is another option if you can't come to an agreement and want debt collectors to stop calling. While this is a scary word for many, it shouldn’t be.
Contrary to popular belief, you do not lose everything if you file for bankruptcy. All provinces and territories have a list of assets that cannot be taken from you if you declare bankruptcy.
Filing for bankruptcy also issues a ‘stay of proceedings’ that stops debt collectors from calling you. It also halts most legal actions and prevents your wages from being garnished as well.
A first bankruptcy can be completed in as little as 9 months but may take 21 months depending on factors such as your income. You will be required to attend two financial counselling sessions, like a consumer proposal.
Bankruptcy is an option of last resort and very rarely used, it should be noted. Consumer proposals are much more common.
If you’re struggling with calls from debt collectors and don’t know what to do, we can help. Our Licensed Insolvency Trustees can provide a full assessment of your finances and help you see all the options you have.
The whole process typically takes less than an hour.
This first consultation is completely free of charge, and you’re under no obligation to sign anything.
Our Trustees pride themselves on their no-judgment approach to debt. They’re here to listen to your story and offer solutions that help you become debt-free.
Tuesday, November 22, 2022
Learn how to negotiate with debt collectors and stop collection calls. Explore effective strategies, repayment options, and professional debt solutions.
