How to Pay Delinquent Debt

In this day of tightened loan qualifying standards, your credit score and how you manage your debt is more important than ever. Mortgage lenders, banks, credit card companies and other lenders look at these two factors when determining how much of a risk you would be. The more of a risk you are, the less likely they will be to approve you and the higher the interest rate you will pay. Paying off delinquent debt, even if it is a few years old, will show that you take fulfilling your financial responsibilities seriously and make you a better risk. There is a way to pay delinquent debt that makes it manageable while stopping the bleeding.

Instructions

1

Contact the debt holder to see if you can negotiate terms, whether this is with the original debt holder or with a collections agency. If this is an old debt, your credit report should include a contact or information that will help you find one.

2

Ask for a reduced settlement amount that you can afford to pay in full. Sometimes you can even get the debt holder to remove the notation from your credit report if it is paid. At the very least, you can get confirmation that it is paid in full, which you can send to the credit reporting agencies like Equifax, Experian and TransUnion to show it is a closed debt.

3

Negotiate payment terms if you can't pay the debt in full. Make sure that it is a reasonable payment amount and schedule so that you will not fall behind, even if they try to push you to do more. As long as you are paying according to the agreement you made they cannot keep reporting you as an active delinquent account. You must pay the full amount agreed to, on time, in order for this to work.

4

Enlist the help of a reputable debt solutions company to help keep you on track if there are multiple accounts. These companies can negotiate settlement amounts and debt repayment arrangements for you, generally for a small fee. Some companies will even take a single monthly payment from you and make the payments to all the debt holders for you. Take the time to investigate these companies thoroughly before you sign anything with them and do not work with one based on a flyer, commercial or email you receive from them.

5

Get any settled amounts, repayment arrangements, paid-in-full receipts or contracts in writing. Keep copies of canceled checks, money orders or receipts that show that you are or have been fulfilling your side of the agreement. This will prevent further collection attempts for the balance of a settled account or claims that you have made no payments.

6

Read any agreements in full before signing anything. If possible, get repayment arrangement details in writing before sending a check. Take the time to dispute anything that is not in line with the agreement before signing or approving anything.

7

Do not permit direct withdrawal from your account unless you set up a separate account just for that transaction. This will prevent any financial abuse by the debt collectors. While there are laws in place to protect consumers, debt collectors know them far better than you do and are not obligated to be fair or nice.