Skip to main content

NEW YORK (MainStreet) — Fielding calls from debt collectors may be the least favorite part of your day, but handling them strategically may be the most important thing you do all year. Here's what to say to get debt collectors to back off and settle for less than what you owe.

1. “How are you? Let's talk about my debt.”

Call them every day to talk about your debt, says William Waldner, a bankruptcy attorney in New York City.

"It's an age-old sales tactic. Call them every day and ask them over and over again for what you want. Tell them you want to settle, and give them a number. Don't back down. These people are good negotiators, but they aren't used to someone calling them," Waldner says.

You'll probably end up speaking to different people every time you call. Be diligent about keeping records of whom you speak to and where you left off. Eventually, they're going to get sick of hearing from you.

"If you ask someone to settle every day for six months, they're going to want to get you off the books," Waldner says. "Just know that going through this process isn't easy. It wears on you to be a telemarketer, making the same call every day. But it's worth it in the end."

2. “How low are you willing to go?”

Sometimes less is more. Before you say anything, ask what they are willing to do for you, suggests financial attorney and debt specialist Leslie Tayne of Tayne Law Group in Melville, N.Y.

"It's counterintuitive to let them do the talking. When you're on the phone with them, you want to start explaining, but those conversations are so emotionally charged — everything you say can and will be used against you," Tayne says.

More than likely the first figure the debt collectors throw out won't be their bottom line, but you will be able to get an idea of the direction they're heading.

"It's like a poker game. You don't want to tip your hand or negotiate against yourself." She says. "You also have to be realistic. They're not going to settle for 10 cents on the dollar."

When you're speaking to the creditor, remember that they work on commission. They want to make as much as possible off your debt, while you want to settle for as little as you can. At a certain point, you've got to find middle ground.

3. “I'm unemployed, but my family member has offered to pay you today if we can settle this.”

Creditors will often settle for less when they think they've only got one chance to get at least some of their money. If they know you're unemployed but they see a small window of opportunity to get money from a third party, they may take it.

"If you're unemployed, they know they might not get anything," Waldner says. "But if you can tell them your aunt is in a good mood and wants to help you, then they may say, 'Let's just get what we can from this guy and walk away.'"

If you start talking about assets you have, the creditors assume they can get more out of you. Telling them that the money you have is coming from a third party, though, will let them know your debts may be a lost cause.

4. “I was told we could settle this for $5,000.”

When you're speaking with a debt collection agency, it's often with several different people over the course of a week. It never hurts to throw out a number and see if they'll bite.

"When you get ready to make a deal, call them up and say, 'I spoke with someone at your office and I was told we could settle this for $5,000,'" Waldner says. "At that point they are not trying to haggle with you anymore, they're checking with their supervisor to see if they are allowed to settle for that figure."

Basically, you're putting them in a position where a decision must be made. Just make sure you sure you can afford to settle for the amount you suggested. In most cases, the collection agencies will want the money sent to them within 48 hours.

5. “Excuse me for a moment; my landlord is at my door to collect late rent.”

It's the classic fear-of-loss sales tactic, Waldner says.

"The debt collector is thinking: 'Who are they going to pay, me or the guy who can evict them?'" he says. "They will be much more likely to take your settlement when they see that you have other more important debts in your life."

If the debt collectors see that the whole world is trying to get money from you, they're going to take a good deal when they see one.

6. “I have serious medical or other issues.”

While most creditors have "heard it all before" and likely won't be very sympathetic to your plight, explaining a serious medical hardship or a situation that has resulted in your getting on disability may be effective, Tayne says.

"Don't tell them your back hurts," she says. "But do tell them of a loss or injury that has affected your ability to pay. Also, be prepared to provide documentation if asked."

Other hardships that may affect your ability to pay include a hurricane or other natural disaster, or job loss.

"They sometimes take that into consideration," Tayne says. "They have to meet certain numbers, but you can say, 'This is what happened, is there an option to reduce what I owe based on this?' If you're on permanent disability, for example, there's probably something they can do."

7. “If I could come up with a lump sum, would there be a savings?”

Some creditors don't care whether you pay in one lump sum or in an extended payment plan. For others, however, if you can pay in a lump sum, they may give you a discount on what you owe.

Without revealing that you may have that chunk of cash lying around, ask if there's a discount for one payment, Tayne says.

"Ask them, 'If I was able to come up with a lump sum, what would the numbers look like?'" Tayne says. "Then see how they respond."

By Kathryn Tuggle for MainStreet