Before you attempt to settle with a collection company, check the statute of limitations. By law collectors have a certain amount of time to take legal action against you. The amount of time can very state by state and debt by debt. So determining how much time the creditors have and whether that time is up or not is important. If the statutes of limitations state that the allowable time is up to take legal action, you have every right to tell the collection agency that they are wasting their time by harassing you.

If the debt has gone unpaid for seven years, by law it can no longer remain on your credit report. Please note however, that even though by law after seven years the collection must be removed off of your credit report, the collection company still may have the ability to take legal action, see statutes of limitations. If the statutes of limitations are up and the debt has been removed from your credit report, you are finished and you can forget about the debt.

A collection agency is any agency which collects a debt on behalf of another company, this can include lawyers so don't fear. If you choose to begin negotiation with a collection company first you should determine the likelihood of success. There are typically two types of debt, unsecured and secured. You will have much more success negotiating for unsecured debts. Unsecured debts leave the credit company with little leverage when negotiating; you could say that you hold all of the cards.

The first thing to remember is stay calm and do not loose your temper or you could easily loose the upper hand. It doesn't matter to them if they are dealing with a car loan, business loan, VA loan, or whatever. Keep in mind that your debts have been sold to an outside credit collection agency and are no longer owned by the original creditor. It is best to negotiate by Fax, Email or Mail, this way you create a paper trail. The collection agency more than likely has purchased your debt for 6-7 cents on the dollar. In other words if you owe $100.00 the collection agency purchased it for $6 or $7. Keep this in mind when you begin negotiating. A rule of thumb is to begin negotiating by offering less than 25% of the original debt. When you have a settled on a number that you both agree on, don't open up your check book until you have a contract with the terms of the agreement clearly stated and signed by both parties.

In the negotiating, don't be afraid to address credit reporting. You many request that once the agreed number is paid, that the collection company remove any bad marks from your credit. Remember, knowing your options will put the ball in your court.