Talking to a creditor.

By Jennifer Tucker
May 2, 2024 | 6 Min. Read

It’s happened to all of us: the due date on a bill creeps up and the balance in our checking account doesn’t quite cover the payment. What do you do? Let’s look at two possible paths.


Alex missed a credit card payment due to an unexpected medical expense that drained his bank account. He thought he could catch up the following month, but he couldn’t. He ignored the notices from his credit card company.

Weeks later, he started to get aggressive calls and letters from a debt collection agency. They demanded immediate payment. Feeling overwhelmed, Alex avoided the calls and hid the notices, but the constant contact only added to his stress. He felt helpless and unsure of what to do next.

Eventually, he reached out to a financial counselor for help, but because the situation had escalated, it took a lot of effort to stop the harassing calls and negotiate a repayment plan with his credit card company.


Sarah was facing financial hardship after losing her job unexpectedly. With bills piling up and no immediate source of income, she knew she couldn’t make her next mortgage payment. Instead of avoiding the problem, she decided to be proactive.

She contacted her mortgage lender and explained her situation honestly. She asked if there were options available to help her temporarily lower or defer her payments, and suggested how much she could afford to pay.  

To her relief, the lender was understanding and offered several solutions. The payment plan they settled on gave Sarah the breathing room she needed to focus on finding a new job without the added stress of mounting financial problems.

So, which path is the best one? By being proactive and reaching out to her creditor, Sarah was able to weather her financial difficulties. At the same time, Alex was forced to navigate the consequences and compounding problems of avoiding his bills and debt collectors.

In this blog, we’re exploring the best strategies for dealing with debt collections and tips for debt negotiation. Whether a creditor or debt collector contacts you directly or you choose to reach out proactively, these tips can help you navigate the conversation with confidence.  


The best strategy for debt repayment is to be proactive and engage with creditors or debt collectors early. The first step is to create a spending, savings, and repayment plan to get yourself back on track. A financial counselor is a great resource for debt help, and they can help you make this plan. Then, with your plan in place, contact your creditors.

When you reach out to a creditor or debt collections, tell them you are:

  1. Being proactive. Creditors are used to people trying to avoid them, so they’ll be impressed that you’re reaching out. This automatically gets the conversation off to a good start.

  2. Working with a credit union financial counselor. Creditors also like to see that you’re working with a credit union financial counselor. They understand the role counselors play in helping people honor their financial obligations.

  3. Proposing a solution. Creditors like it when you have a plan because it saves them from having to convince you to repay your debt. Plus, coming prepared with your own proposal ensures it’s a doable plan you can comfortably commit to.

  4. Committing to repayment. Creditors often assume people are attempting to avoid their obligations. Stress your determination to make consistent payments and it will be difficult for the creditor to reject your proposal. If you are unable to follow-through, communicate with them on why.


It’s not easy to navigate debt repayment, especially if you’re faced with persistent calls from creditors or debt collectors. Know that you have options to take control of the situation. Here are four tips for negotiating repayment and finding a solution that fits your financial situation.

  1. Communicate with confidence. Don’t let creditors or debt collectors pressure you into making a promise you can’t keep. If you can’t afford the payment they propose, explain why and suggest what you can afford to pay. Avoid agreeing to a repayment plan that doesn’t align with your financial situation. You shouldn’t compromise high-priority obligations—like rent or groceries—to pay off low-priority debt.

  2. Engage in negotiation. Contrary to popular belief, creditors and debt collectors are open to negotiation. Most realize that certain circumstances call for flexibility, and they will work with you to negotiate a monthly payment your budget can handle. However, do keep in mind that not all debt collectors buy debt, many are hired so they only have certain thresholds of settlement they can honor.  If you want to offer lower than their threshold, ask about the ability to send their client the lower offer directly to get an answer.

  3. Make a counteroffer. When a debt collector demands a larger-than-possible payment, acknowledge their request and propose a more manageable monthly payment that fits your budget. Be willing to negotiate and be firm in expressing your commitment to repayment. The debt collector may say that they are “as low as they can go” and that may be true.  You may not get on an “official” repayment plan with them, but what you can do is send them payments that fit your plan and they will be applied to the debt.

  4. Know when to settle a debt. When a debt has been sent to collections and your credit has already been damaged, it may be beneficial to settle the debt. Settling a debt allows you to pay a percentage of the original amount owed. You should get the creditor’s written agreement that the amount you agree to pay will settle the debt.

If you choose to settle a debt, understand that this information will remain on your credit history for seven years and may impact your credit score. Also, the IRS views it as income when debts are settled for less than the full amount. The difference between what is owed and what you pay over $600 per debt will be reported to the IRS if it exceeds a certain amount.

It is also important to note that you may be tempted to simplify your debts by reaching out to a for profit debt settlement company.  These companies are not doing anything that you cannot already do on your own. If you want debt management help and do not qualify for a consolidation loan, please call our financial education partner GreenPath Financial Wellness to talk to them about a debt management plan.


When you’re ready to call a creditor or debt collector, here’s a script you can use to ensure the conversation goes smoothly:

I’m a credit union member and I’m working with a financial counselor at my credit union. With their help, I’ve come up with a plan to repay my debt as quickly as my financial situation currently allows. (Be prepared to tell them why you are in financial hardship.  You may feel like this is an invasion of privacy but they will need this information.  Also let them know if you are any sort of government assistance programs)

I want to honor my financial obligations, and I understand this will only happen if I work hard to implement my plan. At the moment, I can’t make the full monthly payment (or the amount requested). So, I propose that I make a monthly payment of $XX. I plan to get back to making the full monthly payment as soon as I can.

I commit to contacting you if anything changes in the meantime. I’m committed to repaying my debt.

The next time you can’t pay a bill, don’t avoid your debt; be proactive. Following these tips to talk to creditors and debt collectors can help you take control of your financial well-being and work towards a more secure financial future.

No matter how you engage with creditors or debt collectors, you should know what’s fair and legal. The Fair Debt Collection Practices Act (FDCPA) defines legal and illegal collections practices and safeguards consumers against harassment, deceptive tactics, and unfair treatment. Know your rights under the FDCPA to ensure you’re treated fairly and respectfully throughout the debt collection process.

Learn more about what happens when a debt goes to collections.

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