Making the first offer is a big mistake. Get the finished deal in writing before you pay.
Sending a settlement offer in the mail is like playing poker with your cards face up. The worst first move is to name your number before they name theirs.
Collectors want settlements. Settlements are how they collect accounts they would otherwise never collect. Their job is to convinse you to settle. Our logic is why convince them, when it is their job to convince us?
Industry surveys have put liquidation rates in the low teens to high twenties, depending on the type of debt. On a monthly basis, an agency is collecting the full balance or a settlement on a very small slice of its inventory.
They spend the day looking for the files that will pay. A letter that says “I will settle for X” does that sorting for them.
A written offer usually reads as a motive: a house, an apartment, a clearance, a license, a job, or a credit cleanup. If they think they stand between you and something you need, they get less flexible. See why a validation letter can signal the same thing.
It is fine to be willing to pay. You do not want them to think you have to.
The letter also wakes up a file that may have been sitting still. They research you before they answer. You want to be more prepared than they are, not the other way around.
Collectors have a manager a few desks away. The business runs on urgency. If the collector can walk a counteroffer over to them and say the money is ready once the agreement is emailed, that offer is more likely to move.
A letter cannot do that. First offers in writing often are not accepted for the reasons stated above, and the back-and-forth is too slow to use their auto-dealership like approach against them.
Call and wait for them to make settling their idea. When they do, say you will look into it and that you will call back. That starts the negotiation without you naming the first number.
Before you call, know whether you can settle every delinquent account, not just this one. See what to consider first.
Once you agree, get the settlement in writing before you pay: make sure it is on their letterhead, that it states the particulars about the account, the balance being settled, the amount, the deadline, and that the account will be considered satisfied. That letter is the receipt.
A debt collector's job is to convince you to settle. Making the first offer puts you at a major disadvantage. If you are hoping for the best deal, wait for them to make settling their idea. See how we help you handle the negotiation.
After you agree, and before you pay. The letter should be on their letterhead, state the particulars about the account, the balance being settled, the amount, the deadline, and that the account will be considered satisfied.
Not if you don't want to increase your chances of paying higher percentage settlements on the remaining accounts. Debt collectors can see if you have settled other accounts by looking at your credit report. If they see that you have, they are more likely to be less negotiable because they now know that you have to pay them too in order to solve your overall problem. See Part 3 of Jared's 4-Part series that covers this often overlooked consideration.
Read the free series first, or have Jared look at the accounts with you.