How to Negotiate Old Debt

Many people have old debt appearing on their credit report. Quite often, people forget about old loans, credit cards and bills they were unable to pay. However, old debt can damage your credit history and lower your credit score. If you currently have old debt, consider paying it off as soon as possible. Fortunately, there is a way to negotiate your old debt with creditors and collection agencies.

Instructions

1

Evaluate your personal budget and expenses. Before you begin paying off old debt, you need to be fully aware of your financial situation and obligations. You should be current on all of your bills, with enough money set aside in your savings account for an emergency. So, take time to look over your personal budget to decide how much money you can actually afford to pay each month toward your old debt.

2

Order a copy of your credit report. You can order your free credit report online by visiting AnnualCreditReport.com. You will need to request your credit report from the three major credit bureaus--TransUnion, Exquifax and Experian. Please note if the credit bureaus cannot verify your identity online, or you have a security freeze or fraud alert on your account, you must order your credit report over the telephone or via postal mail.

3

Review all three credit reports and make a list of your old debt. Be sure to write down relevant details about each debt, such as the creditor or collection agencys name, your outstanding balance and the date of your last payment.

4

Contact the creditor to discuss your payment options. You should contact each creditor or collection agency one by one and try to negotiate a reasonable settlement offer or payment plan with them. It is possible that the creditor or agency will make you a settlement offer for a fraction of what you owe. Nevertheless, be sure to let them know the exact amount that you can afford to pay toward your old debt.

5

Request that the creditor delete your account information from your credit report. Let the creditor or collection agency know that if you agree to payoff your past due balance you would like for them to remove the old debt from all three credit reports. This is very important since it will give you a better credit profile.

6

Get the agreement in writing. Ask the creditor or collection agency to send you a confirmation letter outlining the terms of the payment agreement. The letter should also state your current balance due (including late fees and other penalties) and your due dates for the payments. In addition, the letter should also state whether or not the creditor or collection agency plans to remove your old debt from your credit report once you pay your balance in full.

7

Submit your payments according to the agreement. It is important that you follow the payment schedule and make all of your payments by the scheduled due date. Once you submit your final payment, your balance will be paid in full and you can begin paying off another old debt. Be sure to ask the creditor or collection agency to send you a paid in full letter as soon as you make your last payment.

8

Check your credit report for updates. As soon as you pay off an old debt, the creditor or collection agency should either delete the item from your credit report or update your account status to paid in full. Give the creditor or agency at least 30 days to submit your payment details to the credit bureaus. You can order your credit report by visiting TransUnion.com, Equifax.com and Experian.com.