How to Offer a Settlement for a Bad Debt on a Credit Report

Offering a settlement agreement for bad debt listed on your credit report can provide the opportunity to satisfy balances for less than you owe. Not every creditor will negotiate and settle your balances. But if you're going bankrupt or dealing with hardships and can't repay the entire balance, your creditor may understand your plight and allow a lower payoff.

Instructions

1

Take steps quickly to receive a favorable response from creditors. Request a settlement as soon as you realize that you can't pay the full balance. Don't wait until the account reaches the collection's department to ask for help.

2

Assess your finances beforehand to decide an affordable settlement offer. Present what you can afford to pay. Offer less than your budget because your creditor will doubtlessly reject your first offer and propose a higher payoff. If a creditor accepts your suggested settlement offer, the company may allow installment payments or make you present all funds in a single payment.

3

Give your creditor a reason. A creditor is likely to reject your settlement offer if there isn't a valid reason for the request. Anticipate questions from the creditor about your current financial standing or employment situation. Be prepared to give an explanation as to why you need to settle your debt for less than you owe.

4

Get the details of your settlement agreement in writing. Sending a payment before receiving confirmation of your settlement agreement can create problems for yourself. The creditor may change the conditions of the settlement after receipt of your payment, or continue collection attempts for the balance. Read the agreement closely, and only sign and send your payment if you agree with all the terms.