How to Negotiate a Write-Off Debt

Negotiating a debt that a creditor considers a write-off is possible in writing or over the telephone. The creditor officially lists the debt as a charge-off after considering it noncollectable because you stopped making payments as agreed. Charge-offs usually occur after debts are past due by more than three months. The creditor sends the charge-off information to the major credit bureaus, making it difficult for the debtor to qualify for new credit at competitive interest rates. People seeking to improve their credit can consider negotiating old debts through debt settlement.

Instructions

1

Read your credit reports from the three major credit-reporting agencies for information about the charge-off. Get these reports from Annual Credit Report, the only website the Federal Trade Commission (FTC) endorses for this purpose. Note the amount of the charge-off and contact information for the creditor or debt collector.

2

Contact the creditor or debt collector when you are ready to pay 20 to 70 percent of the balance to settle the account. Smart Money reports that's how much creditors and debt collectors are willing to accept to resolve old unsecured debts, such as credit cards. Make an initial offer of 20 percent.

3

Raise your offer gradually over several months if the creditor or debt collector will not accept 20 percent. Exercising patience may allow you to negotiate a deal you can afford. At some point you must strike a balance between what you can afford to pay and what the creditor or debt collector will accept. Deals for around half the balance or a little less may represent good value for both sides.

4

Obtain details of the agreement in writing before paying with a cashier's check.