8. Negotiating a Settlement Yourself

If for whatever reason you want to negotiate a settlement, here is how to do it on your own.  Once again, do not use a debt settlement company in Canada.

Generally remember this: you are in a contract dispute, or trying to settle a debt, they are your adversary.  They aren't on your side, and privacy laws protect you from sharing any information that you don't chose to.  Helping them "get" you is their trick.  If you were fighting a speeding ticket, would you call the prosecutor and tell them that you were speeding on this date at this time?  Of course not.  Do not help the company you are in a dispute with.  It seems like common sense, but the biggest mistake people make is volunteering all of the information the evil company needs to make you pay them.  I'll reiterate now that if you ignore them, they won't have any idea what your case, or their case actually is, and they will drop it. 

Also remember, they aren't the police, or a court.  They will lie to you and tell you that you have no choice and that they will ruin your life.  If they can lie to collect their debt, then you can lie to negotiate a better settlement.  Remember, YOU HAVE ALL THE CARDS.  If you do nothing, they will get $0, so any amount more than $0 is a win for them.  They usually set a floor settlement of 25%.  Anything less than that and they would rather take the tax write off by cancelling your debt, so 25% is your goal.  If they won't accept that, then you're good because then you pay 0, which is what I've been advising all along.  Anyway, here is how it works if that's the way you want to go.

Step 1: The Bank or Utility

As soon as you're about 60 days late on your payments, the bank or utility will start calling you.  They are usually somewhat friendly, and don't want to be the "bad guy".  They hire collections companies to do that to protect their reputation.  These phone calls are to investigate your ability to repay.  During this call you can either make yourself look like someone worth chasing, or someone they'll have to write off.  You want to be the latter.  Remember, privacy laws protect you, all your creditor will know is what you tell them.

What they want to hear, so they can sue you:

That you're employed in a salaried position (possible wage garnishment)
That you have assets (you won't declare bankruptcy)
That you own your house (they can put a lien on it)

What they don't want to hear, you're not worth chasing

Nothing.  If you don't return their calls, they're working in the dark.
That you're unemployed
That you have a lot of other debts in addition to theirs (you're likely to declare bankruptcy and they'll get nothing regardless)

2.  The Collection Agency

Pre-negotiation 

After the bank has collected your information, or you have ignored their calls for a few weeks, they're ready to send the file to their enforcers: the collection agency.  CIBC, for example, doesn't want to go on record calling a worthless deadbeat and telling you that you are scum and they will destroy your life if you don't pay them, so instead they hire some goons to do it.  Once again, I recommend ignoring them till they go away, which they will, but if you really want a settlement, repeat what you told the bank. Tell them you're unemployed and have no money.  They'll start at 100%.  Be clear: I have no ability to repay even $50, let alone the full-balance.  At this point they will start calling you names and belittling you.  They'll ask you to get money from your parents or friends or whoever (what a bunch of bastards these collection agents are).  Tell them you have already asked, and obviously no one is going to give you money to pay off your debts.  Their strategy (because they aren't allowed to harass you, is to get you to agree to something.  Anything.  They need a new reason to call you back, calling you back for the same reason is harassment.  They say something like "Okay, well why don't you make some phone calls to your friends and family and Ill follow up with you tomorrow?".  If you agree, you given them a fair reason to call you back.  Remember, your goal is 25%.  When they call the next day, say you have 2%.  Then 3%.  Make it look hopeless.

Threats

At this point, they'll start threatening you.  The first one is usually "well, this is your last chance.  I dont want to do this, but if I can't get something worked out today I'm going to have to escalate this to our legal department."  They all say this, and it isn't true.  It's hilarious how standard this trick is.  Sometimes they'll even mail you court papers.  So sneaky.  Look at the top corner of the document where the court seal should be.  It isn't there.  They're trying to deceive and scare you.  Sometimes they will call you and say, "I'm the lawyer representing XYZ Collections."  This is always a lie, they never have in house lawyers simply because a lawyer earns money, they went to law school so they wouldn't have to work in a collection agency call center with a bunch of idiots who didn't graduate from high school.  A lawyer bills hundreds of dollars per hour, just them working on your file for 8 hours would negate the point of them chasing you in the first place: to recover money.  Lawyers are just too expensive, high school drop outs in a call center so unskilled and desperate for a job that they will do this for a living are not expensive.  Next they'll move on to progressively more severe threats.  These days they're usually more careful with their wording than they used to be.  10 years a go they'd say "I'm to to take your house" which is illegal, especially because they have no ability to do that, but now the say things like "We're looking at your house"  "We're going to look at your bank accounts and assets".  It's all BS.  The fact of the matter is they are terrified that they will get $0, because unless you give them more than that, they're screwed.  They have no way to get your money unless you give it to them.

Settlement:

After a few weeks they'll keep telling you all the time, "We need to fix this now before it goes to our legal department" which it never will.  Make them wait days before moving up in 1% increments.  When you get to 5% of the total debt, stop.  Say you've called everyone you can think of and its 5% or you're going to have to declare bankruptcy.  This the worst thing they can imagine, since it will release you from all obligation immediately.  At this point, they will tell you that you can't, that your debt won't be covered under bankruptcy laws (lie) or that you don't want to do that.  I have a collection agent tell me once that "You can't just declare bankruptcy, if you could than everyone would do it."  Everyone does do it.  There were 89,332  bankruptcies in Canada in 2011.  Screw you collections agent.  Anyone can declare bankruptcy at anytime. The threat of bankruptcy is the collection agent's worst fear, and they'll use a variety of tactics to pretend that that isn't an option for you.  It is.  Anyway, once you've said 5% leave it there.  When they call back tell them you have no other options and that if they'll accept 5% you'll move forward, if not there is nothing more to talk about.  If they call back again, tell them you've noted the date and time, that you have done everything you can, and unless they are willing to accept your offer to stop calling, you won't be harassed. As for their mailing address suitable for receiving registered mail. At this point they should offer you their lowest settlement amount.  Tell them to send it to you in writing, and you'll see what you can do.  At this point you can either accept it, and put this behind you, or do nothing and pay nothing.  If you do nothing and pay nothing, they'll give up and 6 months later you'll get calls from another agency.  This one will be far less persistent because they know both the bank and another agency have failed.  Repeat the above process.  After two years your debt is no longer legally enforceable.  If you get anymore phone calls at this point, just say I dispute it entirely, you'll have to sue me.  They don't even have that option anymore so it's fun to call their bluff.