Negotiating with an original creditor after an account has been turned over to collections can possibly save you money. Debt negotiating involves proposing a settlement offer to settle a debt for less than you owe. Some creditors sell bad debts to third-party debt collectors, wherein you're unable to negotiate a settlement with the creditor. But if the creditor still owns the debt, and it hired a collection agency or transferred the debt to a collections department, you can speak with the creditor to negotiate the balance.
Request current account information. The original creditor can provide information on how much you presently owe. Contact the company with your name and account number to acquire this information.
Prepare before approaching creditors with your offer. Don't start negotiating with creditors until you know what you can afford to spend on the debt. You'll need to offer a lump sum for creditors to consider your settlement. According to Military Money, a creditor may accept a settlement that's only 70 percent of the balance. If you owe $5,000, prepare to spend around $3,500 to settle the balance.
Talk to your creditor and expound on why you're negotiating the debt. A sound reason might include having several debts that you're incapable of paying off in full. Disclose that negotiating the balance can potentially avert a personal bankruptcy. Mentioning a bankruptcy can perhaps impel a creditor to negotiate since the company may suffer a financial loss if you file.
Maintain all records from your creditor, such as any written confirmation acknowledging the debt negotiation and final agreement. Photocopy your payment before sending and keep this copy with your records as well.