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How to Negotiate with Creditors or Collectors

If you’re struggling to keep up with payments, you’re not alone—and you have options. This guide covers practical steps, proven strategies, and simple scripts to help you negotiate lower payments, settle debts, or create realistic agreements with creditors or collectors.

Person negotiating with creditors or collectors about their debt repayment options
i Did you know? Many creditors are willing to work with you if you reach out before you fall too far behind.
✔ Reviewed by Money Fit Team Updated June 2025
Quick Facts About Negotiating with Creditors or Collectors
  • Open communication can lead to more flexible solutions.
  • You have the right to request a hardship plan or modified payment agreement.
  • Never agree to terms you can’t afford—get all offers in writing.
  • Written agreements protect you from misunderstandings.
  • Nonprofit credit counseling can help you negotiate and communicate more effectively.

How to Negotiate with Creditors or Collectors: Step-by-Step

  1. Know Your Rights and Situation
    Gather account details, balances, and payment history. Learn your rights under the Fair Debt Collection Practices Act (FDCPA).
  2. Assess What You Can Afford
    Review your budget and decide on a payment or settlement amount that works for you.
  3. Contact the Creditor or Collector
    Reach out honestly and clearly to explain your financial hardship. Stay calm and polite.
  4. Request a Specific Solution
    Ask for lower payments, reduced interest, waived fees, or a lump-sum settlement—whichever fits your needs.
  5. Take Notes and Get Offers in Writing
    Document every conversation, and never agree to anything until you have the offer in writing.
  6. Review the Terms Carefully
    Understand all agreement details and how they may affect your credit before accepting.
  7. Follow Through or Seek Help
    Stick to your agreement. If you can’t reach a solution, contact a nonprofit credit counselor for guidance.

What to Expect When Negotiating with Creditors or Collectors

  • Creditors may offer temporary or permanent relief: You might get lower payments, interest reductions, or waived fees.
  • Collectors may negotiate settlements or payment plans: Be prepared to discuss what you can realistically afford.
  • Your credit may be affected by certain agreements: Settling for less than owed can impact your credit score.
  • The process can take time: Negotiation may require multiple calls and follow-up.
  • Professional support makes negotiation easier: Credit counseling agencies can guide you and advocate on your behalf.

Pro Tips & Common Mistakes to Avoid

  • Stay calm, polite, and firm: Don’t let a creditor or collector pressure or intimidate you.
  • Practice your talking points or script before calling: Be clear about what you need and what you can pay.
  • Always keep written records: Save letters, emails, and notes from every conversation.
  • Don’t promise more than you can deliver: Only agree to terms you know you can keep.
  • Never send money or share personal info before you get the agreement in writing: Protect yourself from misunderstandings or scams.

Real-Life Negotiation: Erik’s Story

Erik, 47, felt the familiar dread of creditor calls after an unexpected job loss left him behind on his credit card payments. Instead of ignoring the situation, he chose a different path. He took the initiative to contact his creditors directly, calmly explaining his job loss and his commitment to paying what he owed.

He proactively requested temporary hardship plans with lower payments he could manage while he searched for new employment. When one creditor pushed for a lump-sum settlement, Erik’s caution kicked in. He insisted on receiving the full agreement in writing before sending any money, protecting himself from a potentially risky deal.

Through his direct and honest communication, Erik navigated a stressful period with integrity. Within a year, he had secured a new job and was back on solid financial ground. He emerged from the challenge with less stress and a renewed sense of his own resilience, having faced the problem head-on.

Example Scripts You Can Use

  • Requesting a hardship plan:
    “I’ve recently experienced financial hardship and am struggling to make my full payments. Is there a hardship program or a way to temporarily lower my payment?”
  • Settling for less than owed:
    “Would you be willing to accept a lump-sum payment for less than the full balance to settle this account? If so, can you provide the terms in writing?”
  • Confirming an agreement in writing:
    “Thank you for your help. Can you please send me the details of this agreement in writing before I make any payments?”

Frequently Asked Questions

What should I say when I contact a creditor or collector?
Clearly explain your financial hardship, be honest about what you can afford, and ask for specific solutions such as a payment plan or reduced interest.
Can negotiating with creditors affect my credit?
Sometimes—modifying payments or settling debts may impact your credit, but it’s often better than missing payments or defaulting.
Should I try to negotiate on my own or seek help?
You can start on your own, but nonprofit credit counseling offers expertise and support to improve your results and confidence.
What if a creditor won’t work with me?
Stay persistent, keep records of your attempts, and contact a nonprofit counselor for further guidance or advocacy.
Do I have to accept the first offer?
No—take time to review, ask questions, and only agree to terms that fit your budget and needs.

Need Support Negotiating with Creditors?

Effectively communicating with creditors is a great first step, but it doesn't always solve the problem. Our certified counselors are here to help you move forward. If direct negotiations aren't providing the relief you need, a formal Debt Management Plan (DMP) could be the answer.

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NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

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To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

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The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

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Housing Counseling and Education Fee Schedule  

Online EDUCATION Program Fees* 

eHome Homebuyer Education Course: $99 per household** 

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours) 

Online Workshops: $49 per participant 

  • Rental, Fair Housing, Predatory Lending Post-Purchase, HECM Family Member  
  • Approximately 1 hour each 

Other Self-Guided Financial Literacy Webinars: $0 

  • Credit, budgeting, homelessness prevention, debt prevention 
  • Approximately 30-60 minutes each 

One-on-one COUNSELING Fees* 

Pre-purchase Home Buying, Renter Issues, Homelessness, and Fair Housing: $0  

Post-purchase Ownership and Maintenance, HOEPA or Financial Management $75/hr  

Reverse Mortgage/HECM Counseling with Required Certificate $200 per household†  

Credit Report Fee Paid Directly by Client 

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable 

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page 

**Household is an individual or a couple  
†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there)