How to Settle Old Credit Card Debt

Unpaid debt can have a serious effect on your credit score. This is especially true if the account has been turned over to collections. Collection activity on your credit history can make securing new credit difficult. Consumers with unpaid debt face higher interest rates, difficulty securing housing and challenges landing a job (if the employer checks credit). Setting old credit card debt can help you clean up these problems.

Instructions

1

Contact the credit card company if you haven't paid your credit card in awhile. The creditor has likely turned the account over to collections. After an account has been turned over to collections, you'll need to settle with the collector instead of the original credit card company. Dig out old credit card statements, contact the creditor and ask for collection contact information.

2

Crunch numbers to determine how much you can pay towards debt. Create a budget. List your monthly income and other debt obligations. Calculate the amount of money left over to pay off an old credit card. This will help you negotiate with lenders when determining the settlement amount or monthly payments on your debt.

3

Decid how you want to settle the account. According to Bank Rate, paying the account in full will look better on your credit report than settling the debt. If you settle the debt, the collector agrees to accept less money than you owe.

4

Request a letter from the collector. A collector doesn't have to provide this letter. The best time to ask for a letter is when you're negotiating repaying your debt. Without this letter, credit bureaus won't automatically remove the debt from your credit report.