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How to Negotiate with a Collection Agency on Behalf of Your Clients

By: Daniel Rosen Last updated: June 2, 2018

negotiate-with-creditors.jpgOne of the biggest strengths you have as credit repair professional is knowing how to negotiate with debt collectors on behalf of your clients. It’s likely you will need to utilize this skill often as unpaid debt is one of the biggest contributors to bad credit and many of your clients will expect you to help either through advice or action.

Why Negotiate with Creditors?

Before we even get into how to negotiate with debt collectors, let’s explore the “why” - why should you even try negotiating with creditors on behalf of your clients? The answer is that both lenders and collection agencies are almost always willing to work with people on their unpaid debts.

While some of your clients might be playing the ‘I never answer the phone’ card, it’s actually in their best interest to engage in discussions about how they can lower and repay their debts.

That’s where you come in - as a credit repair specialist, you can not only help your clients reduce and repay their debts, you can also assume responsibility of the process and shift the burden and stress off of them.

How to Negotiate with a Collection Agency

There is a bit of learning curve with debt negotiation, but like all things the more you do it the easier it gets. Here are 5 places to start:

1. Understand Your Client’s Story

It’s paramount that you understand why your client is in debt so that you can relay the issue to the creditors. Debt collectors are people, too, and knowing both what happened and how your client plans to fix it puts you in a much better spot to negotiate.

Questions to ask your client include:

  • How long have you had this debt?
  • Why didn’t you pay it off?
  • Was there a hardship?
  • Are you prepared to pay it off now?  If not - how much can you pay?

2. Be Proactive

While it’s always a good idea to confront debt head-on, it’s particularly important if your client has been ignoring the calls of collectors. It’s your job to appear willing to negotiate and you can’t do that if you stall or postpone the process.

Go on the offensive by doing 3 things:

  • Ask your client where they owe money
  • Check the client’s credit report to make sure what they said is accurate
  • Once you have their story and the relevant information, place a call (not an email) to each creditor or collector and start the negotiation process.

3. Know What to Ask For

A credit negotiation extends beyond the balance - you can also discuss lowering other aspects of the debt in order to reduce the total amount owed and lessen the future impact of the ordeal.

Start with these:

  • Fees - if your client was assessed any late fees for non-payment, try and get them dismissed using your understanding of why they were unable to pay
  • Interest - it’s likely interest has been accruing on the account since the beginning and if you can reduce the amount owed it can significantly lower the bottom line
  • Negative Credit Marks - yes, even the client’s credit report can be used as a bargaining chip - if they are able to pay off the debt in full make sure to ask for the creditor to remove any negative marks on their credit report

4. Counter Offer

As the negotiation with creditors progresses, there will come a time when they make an offer to settle the debt. Your goal during this step is to settle for as close to 50% of the original amount as possible. Unless their offer is in the ballpark, you need to respond with something more favorable to your client (a good place to start is 20% of the amount owed).

Negotiation is a process, so don’t be surprised if there is a lot of back and forth - just remember that they want this to work as much as you do and almost always have more leeway than they let on.

This is the perfect place to reiterate pieces of your client’s story - maybe they only have a limited amount of money for repayment or suffered some financial hardship, it’s your job to use the story to support of your counter offer.

5. Get Everything in Writing

Once you’ve come to an agreement with the creditor, request that they send everything over in writing. It’s important to document the agreement before paying anything. Be very suspicious if they are not willing to do it. The library in Credit Repair Cloud has letters already written for this purpose.

Things to ask for include:

  • Total settlement amount
  • Monthly payment structure if unable to pay in full
  • Any fees and interest that you were able to get removed
  • Negative items to be deleted from the client’s credit score

A Note on Different Types of Creditors

How to negotiate with debt collectors may vary based on the type of debt you’re working with.

Debt is diverse and it’s worth mentioning the different types of creditors you’re likely to run into while running a credit repair business. Full details are beyond the scope of this post, but these will at least give you a solid platform on which to negotiate.

Home and Vehicle Loans

These types of loans are generally fairly easy to negotiate on but you’re likely to see more success if the lender is small and the client has some cash to settle the debt immediately.

Student Loans

Money owed via a student loan is very hard to get lowered or dismissed and if you’re going to pursue this it’s easier to use an established program like Student Loan Forgiveness rather than negotiating with the creditor directly.


Most credit repair specialists have success negotiating with owed taxes, but your chances increase the older the taxes are.

Banks and Credit Cards

Traditional lenders like banks and credit cards are always willing to negotiate when it comes to debt. However, despite the likelihood of success, don’t expect to settle for less than 50% of the total amount.

Putting It Into Practice

If you’re starting a credit repair business it’s likely you’ll develop your own process for how to negotiate with collections agencies over time. What’s important is to develop and document a process so that you can not only measure what works but also provide a blueprint for your team as you grow.

Just getting into credit repair?  Check out our Checklist for Starting a Credit Repair Business!

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