Dealing with Collection Agencies

Dealing with Collection Agencies - Chapter 5

Now that you have a good understanding of how to dispute collections, we are going to move to the hardest part of our credit repair tutorial, dealing with the collection agencies. First, we must learn the golden rules of dealing with collections agencies.

10 Golden Rules to Dealing with Collection Agencies.

• Collection agencies are the Devil .
  
  
• The Devil Lies.
  
  
• Never, ever, ever give a credit card, debit card or checking account number to a collection agency. Make all payments via certified mail with a money order or with certified funds.
  
  
• Never pay off or make payments on a debt UNLESS you have a written agreement that spells out EXACTLY what they will do in exchange for payment. Make sure this is written on their company letter head and signed by a supervisor.
  
  
• Asking to speak with the supervisor rarely works, he or she received their position by being the best liar.
  
  
• Never ever tell the collection agent that you are trying to clean up your credit for a specific reason, i.e. buy a car or qualify for a house. They will not budge or negotiate.
  
  
• Collection agencies hold all of the cards, losing your temper will not help you. However, they are all on commission, this is your primary weapon.
  
  
• Never accept the collection agent's first offer, or believe that their boss wont let them take less than than a certain amount. See rule number 2.
  
  
• Never give collection agencies permission to call you at work, do not call them from work, do not give them any information about your work. Collection agents are like vampires, they cannot enter your place of work unless they are invited.
  
  
• If the agent gets you mad, they win. This is business and egos and tempers are the biggest killers of business deals.

When Negotiating, Never Forget Your Goals

1. Repair Your credit as soon as you can.
2. Pay the least amount you can to satisfy your obligations.
3. Have negative remarks removed as soon as possible.

Preparing for Battle

It's easy to lose sight of of your goals when negotiating, tempers will flare and egos will collide. Drawing a line in the sand, i.e." I wont pay a dime over $xxxxx" only calls each person's ego into the mix. This will only assure that you will either have to pay the full amount or not pay the debt at all. Remember your goals, it is very likely that you may have to lose face to accomplish your goals and get your best deal; but who cares, this is business?

When negotiating, ALWAYS use the   "poor me, please help me" gambit; in stead of the "I'm a great negotiator" gambit. It's human nature that MOST people like to help other people when given the chance,however. The art of negotiations is letting the other side feel as if they have controlled the negotiations and helped you at the same time.

The key to letting your opponent win, while you win at the same time, is to ask for multiple concessions from them up-front and lose on the ones you that you never thought you would get in the first place. For instance, during your initial conversation you naively over-state the things you need them to help you with. Always ask for more than one concession, if you don't you will narrow the negotiations down to price alone drastically reducing your leverage in the negotiations.

Establish a Higher Authority

Always establish a person who is "calling the shots" for you, this will place the blame for tough negotiations on an imaginary character, not you. For instance you can say something like this, "my uncle is a tax attorney and he told me to ask you for X, Y and Z. He told me he would help me pay-off all of my old debts if we could get a good deal.

This does two things, it allows the "uncle" to be the bad guy and gives you the power to naively ask for too much without offending the agent. When the Uncle asks for too much the agent can reply with "he's crazy" or something like that without offending anyone. Now the agent is dealing with the uncle, not you. The Uncle can be as tough as he wants and you are the poor messenger who's caught in the middle.

In your initial phone call I suggest that you ask for these concessions right off of the bat:

1. Take .40 cents on the dollar for the debt. (The average settlement is .60 cents)
2. Remove the credit bureau remark. (They really cant do this, but your uncle says they can and he is an expert, again the uncle is the bad guy, not you.)
3. Give you a letter stating that they reported the collection in error. (This is unlikely to happen, but this is a good bargaining chip to use later to help you accomplish your real goal, the lowest price to pay off the collection)

Let every offer, counter offer and refusal come from the uncle. This way the agents tensions are focused on the uncle and not you. For example, "my uncle bob said that most collection agencies will take $XXX for this kind of debt and I shouldn't pay any more than that.." At this point the collection agent is probably going to tell you that your uncle is an idiot and there is no way he could even come close to that figure. They will probably ask to speak with your uncle at this point in the negotiations.

Obviously, you want to keep the uncle elusive and alive. So, I usually say something like, " my uncle is a busy attorney, I gave him your number and he said that he will call you if he has time." Keeping your eye on the ball, sheepishly ask the collector what they consider a good deal is so that you can tell you uncle what they said and maybe you can get him to change his mind.

This will usually get the agent to throw out the first offer, which is exactly what we wanted. Half of the battle of negotiations is letting the other party set the starting point. There is a 99% chance that they "high-balled" you. This means that you can, I mean the uncle can, safely chip away at that offer. Now you are going to make a counter offer by way of your scrooge of an uncle. You want to turn your focus on the decoy concessions, the letters.

You should say something like, " I will tell my uncle what you offered, I don't think he will like it, but I am going to try. What about the letters he asked for"? Maybe I can get him to say yes if we can at least get that. Now you are on the collectors side and trying to get the mean uncle to say yes. Does this sound familiar? It should, it's the good guy bad guy gambit. Car salesmen use it when they are trying to get the nasty ole manager take the deal.

Now all you need to do is to have your uncle make a lower offer in lieu of the credit repair letters. The key to this whole process is that you are never the bad guy. You are the innocent, naive, dummy that both sides are telling what to do. Like I said, you may loose face, but who cares as long as you accomplish your goals.