- 1). Request a free copy of your credit report by visiting annualcreditreport.com, calling 1-877-322-8228, or by completing the Annual Credit Report Request Form found on www.ftc.gov. Mail the form to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
- 2). Review your debts and make sure there are no inaccuracies, such as unknown accounts or amounts listed on your report. If errors are found, contact the creditor listed in writing to formally request validation of the debt. If no information has been validated in writing after 30 days, file a dispute with each of the credit reporting agencies --- Equifax, Transunion and Experian.
- 3). Create a list of all your debts and a list of your monthly income. Compare the two. Create a budget to see how much you can realistically afford to pay to settle a debt. Save these lists.
- 4). Stop paying the bills on the credit card accounts you wish to settle. Put the money you would normally spend on payments into a savings account to let them build to a larger amount. Do not spend this money. It is vital to bargain for a settlement.
- 5). Contact the credit card company to notify them that you will not be able to make a payment. Keep notes about representatives you speak to, what is discussed, and what is agreed upon. Politely notify them that you hope to bring the account current soon. Be prepared to screen your phone calls to cut down on harassing collection calls.
- 6). Wait at least 90 days. Contact the credit card company to discuss a settlement. Most companies will try to pressure you into arranging a payment plan to bring your account current. Be aware that this is not a debt settlement and you are still responsible for the total amount of your account balance. Most credit card companies will refuse to settle a debt in its entirety, but you should always ask.
- 7). Wait up to six months for your account to be turned over to a collection agency. Be aware this will negatively impact your credit report, but any debt settlement will negatively impact your credit report for a period of at least one year following the settlement.
- 8). Contact the collection company. Discuss your settlement options. Hold firm to the amount you know you can afford to pay. If the collection agency does not agree to that amount, wait another 30 days and try again.
- 9). Once a creditor agrees to a settlement, get it in writing on the company's letter head. Make the payment with a cashier's check, not from a personal checking account.
- 10
Request another letter stating that the payment has been made and that the debt is discharged. Keep that proof on file. Without proof in writing, even a paid debt can be turned over to another collection agency.
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