If you have delinquent debt that has been sold to a debt collector, you may be looking for ways to try and resolve the issue — and right now is a good time to decide on a path forward. After all, between today's elevated rate environment and the higher costs of consumer goods, it's getting increasingly tough for many people to cover the basics — much less pay off any collections debt they're carrying. The cost of your collection debt can also increase over time as the interest charges and extra fees continue to accrue. So, if you've been putting off a decision in hopes that your collection debt will get easier to manage, it's time to find a better approach.

While there are lots of potential debt relief solutions to consider, many people find success by offering lump-sum settlements for less than what's owed to clear their overdue debts. With this approach, the goal is to negotiate with the creditors who own your debt to find a settlement amount that works for both parties. The remainder of the balance is forgiven, settling the debt for good. When these types of settlement negotiations are successful, they can result in big savings, with the average person paying between 30% and 50% less on average. 

But here's the catch: Just because you're ready to settle doesn't mean the debt collector will agree to what you're offering. While a settlement rejection can feel like a major setback, it isn't always the end of the road. It may just be a signal that you need to reassess your approach. What exactly happens if a debt collector refuses a settlement offer, though, and what should you do in response?

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What happens if a debt collector refuses a settlement offer?

If a debt collector refuses your settlement offer, you may still be able to find a path forward. All the rejection means is that the debt collector isn't ready to accept that offer right now. So, it's important not to assume a rejected offer means the conversation is over. Debt collectors are businesses, after all, and like any business, they're trying to maximize what they can get in terms of the payment you make on the account. In general, debt collectors will typically refuse settlement offers for a few main reasons:

• The offer is too low. Many collectors expect to collect at least 50% to 70% of the full balance, though it depends on the age of the debt and how likely they think you are to pay. If you offer a very low percentage, let's say 10% to 20%, they may simply feel it's not worth it.
• The debt is still fresh. If the debt was only recently charged off or assigned to the collector, they might want to wait and see if they can collect the full amount before settling.
• They believe you can pay more. If the debt collector sees signs that you're able to pay more than you're offering to settle the account, they may hold out for a better deal.

And, in many cases, a rejection, especially early in the negotiation process, is just a regular part of the back-and-forth. You offer 40%, they say no and push for 60%, and you counter with 50%. Or, they may demand that you show proof of hardship before agreeing to settle the account for less. This could be proof of job loss, medical bills or other types of financial hardships. If you can provide this information, it could result in a better settlement outcome.

Debt collectors aren't legally required to settle any accounts for less than what's owed, though, so in some cases, the rejected offer could result in continued collection efforts instead. This could mean that you're on the receiving end of more phone calls, more letters or possibly even legal action if the amount is large enough.

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How to improve the chances of settling your debt

If your settlement efforts hit a wall, it's worth pausing to rethink your strategy. Negotiating with debt collectors isn't easy, especially when emotions and financial stress are high, but the following strategies can strengthen your chances of reaching an agreement:

Do your homework. Before making another offer, review the details: How old is the debt? Who owns it? Is it past the statute of limitations for collection or reporting in your state? Knowing these facts can give you leverage or at least help you make a better offer.

Offer proof of hardship. If you can explain why you can't pay in full and back it up with documentation, debt collectors may be more open to settling.

Work with a debt relief expert. Sometimes the best move is handing the negotiations over to a professional. The experts who work for debt relief companies have experience negotiating settlements and know what offers collectors are likely to accept. They also bring credibility to the process, which can help persuade the collector to take the negotiation seriously.

Be patient but persistent. Settlement negotiations can take weeks or months, especially if the debt gets resold to another debt collector. So stay consistent, follow up regularly and don't give up after just one rejection.

The bottom line

Getting a settlement offer rejected by a debt collector can feel personal, but it's a common part of the process. Debt collectors have their own priorities, and hearing "no" today doesn't mean you'll hear "no" forever. With the right strategy — and, often, the right professional help — you can improve your chances of eventually securing a settlement that works for both sides.