Before you try to settle your debt, prepare your negotiation strategy and compile the facts: If you can persuasively demonstrate that you can’t pay in full, they may be willing to accept partial payment instead of nothing. First, do a thorough accounting of your income and monthly expenses. You’re going to need to explain to the creditor why you’re behind and where else your money has to go each month. And don’t lie — collection agencies have reams of data on you, so if you invent a nonexistent car payment or medical debt, they’re going to know you’re making it up. Gather the paperwork from the original creditor so you have it for reference when you negotiate.
Also, know your rights so that you can’t be pushed around unfairly. The Fair Debt Collection Practices Act stipulates when and how often debt collectors can call you, what they can say and what kind of threats they’re not allowed to make. (They can’t threaten to sue you unless they’re actually filing the paperwork, for instance, and they can’t threaten you with things like arrest or jail time if you don’t pay your outstanding debts.)
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