How to Settle Debt With Credit Repair

Many companies tout their ability to repair your credit or settle your debt for pennies on the dollar. However, these companies often charge exorbitant fees and fail to deliver their promises. Only one person cares enough to repair your credit and settle your debts: you. This is a lengthy process, but can lead to the successful removal of negative items on your credit report and an increased credit score.

Instructions

1

Obtain validation prior to offering settlement arrangements. Collection agencies are notorious for reporting inaccurately and for failing to comply with federal laws. The Fair Debt Collection Practices Act states that collection agencies are required to provide you with validation that the account belongs to you, and that the information on your credit report is fully accurate. Failure to provide this is grounds for complete removal of the trade line, thus preventing the need for a settlement.

2

Compose letters to the collection agencies offering a debt settlement. Start out by offering no more than ten percent of the balance due. Collection agencies buy accounts for pennies; any settlement amount will likely profit them. Stipulate that the settlement is contingent upon the collection agency deleting the account from all three credit reports. No law prohibits this removal of information. Instruct them that you will send a payment via cashier's check or money order immediately upon receiving their signed statement agreeing to these terms. Make a copy of the letter for your records, mailing the original certified mail return receipt requested.

3

Wait 30 days for a response from the collection agency. Under no circumstances should you attempt to speak with them on the phone. A paper trail is required for evidence if you go to court.

4

Send a second letter if you do not receive a response to the first. Increase your settlement offer to 15 to 20 percent, as you feel comfortable. Include the same stipulations as in the first letter. Return receipts will prove the collection agency is receiving your letters, so persistence is essential. They will most likely agree after two to three letters.

5

Settlement payments should be made via cashier's check or money order. Never send a personal check or pay over the phone. Mail all payments certified mail return receipt requested.

6

Check your credit reports 30 to 60 days later. Verify the accounts have been deleted per the agreement. Consult an attorney if the accounts remain, as a lawsuit may be in order.