You can negotiate with your creditors

Pay Off Your Debts For A Fraction Of The Original Amount!

The fact that you can negotiate your debts, and that collection agencies will often gladly accept pennies on the dollar on some accounts is one of the best kept secrets in the industry. Once you understand the life and death of a debt, it is easy to see why a collection agencies are willing to do this.

Here's How Debt Collection Works

When a debt is 1 month delinquent, there has been no payment during the past 30 day billing cycle. The customer will usually get a friendly reminder usually printed on the next statement and will probably pay promptly.

When a debt is 2 months delinquent, there has been no payment during the past two billing cycles. The creditor is still interested in maintaining the debtor as a customer--they need to collect, but do not want to scare, embarrass or intimidate the debtor into not patronizing them. The customer will probably receive several formal letters, usually 10 to 20 days apart followed by a phone call.

When an account is more than 3 months delinquent, there has been no payment during the past 3 billing cycles and one day. The account is sent to a third party for collection, or the creditor may have a department set up to handle it themselves. They have no interest in maintaining the debtor as a client, and it is 'open season'. But this could be a good thing for you because ...

Collection agencies are often willing to negotiate!

Collection agencies are in the business of making money for themselves, not collecting the most money for the creditor at any expense. To make the most profit, a collection agency has to run like a business. This means using the least amount of effort or expense to collect the most money. If they can collect 70% of a debt with an average time investment of one hour, does it warrant spending four additional hours to collect the remaining 30%? Probably not!

Collection agencies know that many of their accounts are simply uncollectible--the debtor has no assets, is judgment proof, has no income, disappears, or declares bankruptcy, so many collection agencies will settle for 50 cents on the dollar and sometimes less! After all 50% of the amount owed is more than 100% of nothing.