I have a car loan from about five years ago that has defaulted and been sent to a collection agency-
Long story short, I owe about 2,300 on the loan, but the car is right now worth much less... over 100,000 miles, major body damage... from what I understand, the expense to reposess it isn't worth what they'd get for it-
So now, the loan is with a collection agency and I just want to clear it up--
They offered me a settlement of 1900, which I am still not happy with considering the car is only worth about 500, max.
My dad suggested offering them 500 and seeing what they say, and using that as a starting point-
Does that sound reasonable? Anyone have any experience with settling debts for such a small percentage of what is actually owed? Any tips for a strategy on how to deal with the collector?
Thanks for your help!

Offer $750 lump sum as a starting point; stop negotiating when they demand more than $1,150.

Do you still have the car ? Are did they repo the car and sell it, and then say you owe the balance ?

If you still have the car you are lucky, normally they would repo the car.
This is the issue here, this is not like a credit card debt, where they deal a lot more. Since they could fairly easy colleect the full amount, I would want to know what state you live in, if you live in a state where they can garnish your pay, or atttack your bank account, they have all the power on their side.

But what the heck, start with 500 and see if they laugh at you are not, it will get you started.

No, they haven't repo'd the car- it's a 98 escort with a lot of mileage and major body damage, so it's really not worth anything near what I owe on it- if they repo'd it and sold it they'd be lucky to get a few hundred bucks for it-

Which is why it was sent to a collection agency rather than the repo company.

I live in NY state-

How much it's worth is almost beside the point, isn't it? You're being sued for money you borrowed and acknowledge you owe, what you bought with it is not the point.

Lecture over... so offering a settlement is completely reasonable, both parties are now talking and not ignoring the other. I concur, start low and let them talk you up to an amount you can actually come up with. Often 50% of the outstanding debt is attainable.

Pay it in a lump sum, no access to you bank accounts, and they get nothing until they submit the agreement to you in writing. $1000 (or so) payment settles the debt in full with no recourse.

Once you have that in writing, sign it and send it in with a certified payment. Keep your copies. You're done.

Just spoke with the collection agency this morning,they won't go for anything under $1900, which I don't have. They said it goes back to the bank on Friday, and that it may go up when it does. I called the bank to talk to them, and they said they couldn't discuss the account with me till Friday. I asked them if they'd be willing to discuss a settlement at that time, and they said they didn't see why not-

Was the collection agency just trying to get me to pay the full $1900? Do you think they bank will go lower? I can offer about $1,000 right now on this debt- about half. It's pretty old, so I'm thinking they might go for it-

Any ideas or suggestions?

First the current value of the car has absolutely NO bearing on this. You borrowed money to buy this car and then defaulted on it. You took their money and it's the value of their money that counts, not the value of the car.

From what you are saying, the bank is still holding the paper on this and the collection agency is only acting for them. In that case I think $1900 is a generous settlement offer. If the bank had written off the debt and sold it, then I would agree with the others that $1000-$1500 would be a more reasonable settlement.

If you don't have that to pay as a lump sum. Then try to work out a payment arrangement.

No, the account was charged off- so maybe they'll take $1,000 when I talk to them on Friday. I've been debating bankruptcy because I'm overwhelmed with debt right now, and I was told that mentioning that to whomever I speak with would also make a difference in their willingness to accept what I offer- is that true?

I know that 'what the car is worth doesn't make a difference'- and that I borrowed money and I owe it back- what I'm saying is that it wouldn't likely be worth the expense to repo the car now due to the decrease in value- I'm not trying to get out of paying it back- I had a rough time and now I just want to clear it up when I have what I think would be possibly acceptable to them... and I can only work with what I have.

If the account was charged off then why would the collection agency go back to the bank? Generally the original lender ceases to pay for collecting a charged off debt. They just sell them.

I don't know why they're handling it the way they are- but I've seen the info for the account, and it says that it's charged-off. I know that for sure.

The collection agency went down to $1590- called me back a few hours ago. I'm thinking that they may go lower. I told them I can afford $1200 tops. Think they'll go for it?

Who gets the car?

I still have the car- and if I pay them whatever settlement they accept, then it's considered paid in full, no further collection on the acct...

It wasn't financed as an auto-loan, but as a personal loan with the car as collateral. I don't know if that's part of the reason it hasn't been repo'd yet also... but once I pay it, I keep the car.

I still have the car- and if I pay them whatever settlement they accept, then it's considered paid in full, no further collection on the acct...

It wasn't financed as an auto-loan, but as a personal loan with the car as collateral. I don't know if that's part of the reason it hasn't been repo'd yet also... but once I pay it, I keep the car.
You need to know whether you own the car free of any liens before you finalize your settlement.

As I'd said before, in writing, debt paid in full with no recourse.

BTW, I'm still confident you can get this done for around $1000. maybe $1100. They already came down $300 in their first counter offer. You shouldn't go up the same mount unless you want them to counter offer in between, around $1400. That's a fine settlement, but if you sincerely, calmly and earnestly offer the $1000 again, I'll bet they counter down from $1590 at least once more before you have to start upward.

Just a tip. Whatever they offer, "Well, I really want to pay you, but that's more than I can do, can you do any better than that so we can settle this today? Anything at all?"