How to Negotiate a Paid for Deletion With a Collection Agent

No one likes dealing with debt. It follows you and makes financial milestones harder to achieve. If you’re looking to be done with debt, whether it’s a few months old or a few years old, try to understand the options that are available to you.

Deciding to work with a collection agency to pay off a collection account.  Or work with the original lender to pay off a charged off account is a step in the right direction.  BUT once you decide to do this, you need to keep one thought front and center in your mind.

You want this negative information removed.

negotiate with debt collectors and winThat’s the main goal, and some collection agencies will say they can’t remove their tradeline.  Not true.  They can’t delete the original CREDITORS trade line (we will get to this later) but they can remove their own collection tradeline from your credit report.

Negotiating a settlement on a debt is a good way to quickly get things off your credit report.  If paying off your debt in one lump sum isn’t possible, then arranging monthly payments that won’t break your budget is also a good route to take.

When negotiating, you always want to get everything in writing!  Do NOT give them any money without having a letter from them, signed, and on their letterhead that spells out the deal.  If they put it back on your credit report at a later date, that letter will be your proof that you not only paid it off.  But they had agreed to remove their tradeline from your credit report in exchange for your payment.   Always pay them by certified funds, that way they can’t claim your check bounced.  Always make copies of any payment you send to a creditor or collection agency.

Splitting the Difference

how to effectively negotiate with debt collectorWhen you begin negotiating with your collector, they will try to get you to pay off the entire debt. Because debt collectors are paid on commission, they want you to make a large payment relative to your total debt. If they know you can’t pay off the entire debt, they will offer a lower amount. Have a number you’d like to pay in mind. Tell them this number, they will counter offer with a higher number and offer to split the difference. Reject the offer and treat the difference as the new high limit; offer a number between your original number and the difference.

The Negotiations Process

Many collection agencies follow a “settlement formula”.  Depending on the collector, they may offer a settlement of 40 to 60 percent of the total debt.

deal with debt collectorsThat’s a good place to start if the debt is fairly recent.  But when you are dealing with a collector on a very old debt, so old you are only paying it to qualify for a mortgage.  Be more aggressive.  Many of these companies that buy old debt pay PENNIES ON THE DOLLAR for your debt.  As long as the collector DOESN’T KNOW you need this off your report for your mortgage.  You can be very aggressive and offer them as low as 40-50% of what is owed.  And they will usually go for it.  If you are good with negotiations and can behave in a PROFESSIONAL way.  You can go as low as 20% and strike a deal!

Get Everything in Writing

get everything in writing when you negotiateAgain, I can’t stress this enough.  This is a very important step, make sure you keep records of everything. Phone conversations, notices, agreements, etc. Once you work out a payment arrangement, obtain a written agreement with the collection agency and the name of the person you worked out the agreement with. If you’ve agreed on making multiple payments, keep records of the payments you’ve made. On the day of negotiating, take note of the time and day, as well as the person you worked the deal out with.

Making Payments to creditors or collectors

  • how to make safely payments to debt collectorsAvoid making payments with personal checks.
  • Use a cashiers check.  We used to advise using money orders.  But they are a little hard to track. But the main thing is, you want to avoid giving out your bank account information. Some shady collection agencies tend to do illegal things with bank information. However, if you trust the agency you work with, if they seem reputable, sending a cashier’s or personal check should be fine.

After settling the debt, if you are still getting calls or notices about it, send the proof you’ve obtained on settling the debt to the credit reporting agencies. This should stop all communication. If they ignore this, you can get a cease and desist order to force them to stop. Remember, you’re keeping everything in writing in case things go wrong.img-8

Know Your Rights

debt rightsLastly, know that debt collectors must work within the confines of the law.

  • They can’t garnish your wages without getting a court order.
  • It’s illegal for them to threaten you or use profane language against you.
  • They aren’t allowed to call your employer for anything other than verifying that you work there and other general information about you. This is the same for friends or family.

If you are unsure a debt being attributed to you is yours, ask for debt validation. And lastly, debt collectors are not allowed to drain your bank account. There have been cases of shady debt collectors doing this when getting their hands-on bank information. This is highly illegal.


Dealing with debt can be a stressful ordeal. Also, be aware that when part of your debt is forgiven, you will still have to pay taxes on it. Collectors will likely send a 1099 to you at the end of the year.

If you don’t feel like you can negotiate a settlement on your own. Hire a seasoned credit counselor or negotiator to handle it. Having your debt paid for deletion is a good first step to reviving your credit.


how to negotiate a paid for deletion

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

  1. Very nice tips especially that of making an offer, I might have just made an offer of the exact amount I can afford to pay if I had not come across these tips. One really needs to be one step ahead of collection agents to repair one’s credit score.

  2. I have a question. Would this work with a cell phone provider? I have about $300 left over on a Verizon account that I did try paying years ago but they would not let me do it over the phone. They kept putting me on hold so I gave up. Since then, they are the only ones who are persistent with contacting me and I would like to just clear the account already.

    • Yes, it can work with cell phone providers. if you plan on paying them 100% of the amount owed, get it in writing first! Make sure its on their letter head and signed by a manager that they will remove the debt 100%. If you are still dealing w/ Verizon. It would Verizon letterhead. If its been turned over to a collection agent, you want to make sure they use their corporate letterhead. But be warned, they can remove their negative item from your credit report. If Verizon has you as a charged off account, a collection agency usually can not guarantee that the Verizon charged off will be removed. They can have it changed to paid.

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