Things You'll Need:
- Some bargaining money (this will vary depending on the amount of debt you owe and your haggling skill)
- Envelopes and stamps (I advise that you conduct the whole thing through the mail. These people are trained and or practiced negotiators, I assume that you are not).
- A printer
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Step 1
Obtain copies of your credit reports.
There are many ways that you can do this but my favorite is by utilizing one of the online services such as the TrueCredit.com service which is offered by Experian. It itemizes all of your creditors at the bottom of your 3-bureau report and gives you contact information for each. -
Step 2
Dispute as much of the negative information on your report as possible.
The TrueCredit service provides a dispute console where you can dispute negative information on your credit reports online. This really saves you a lot of time and trips to the post office. Be sure not to skip this step a little healthy dispute at the start of this process could save you thousand of dollars when it comes to the settlement negotiation phase of our plan. Why hand out your hard earned money when you don't have to?
It might be a good idea to utilize a credit repair company for this phase of the plan. If you have a lot of debt to be disputed the task may daunting, even through the online portal. As a word of caution however, you should be very careful in the consideration of a company to handle the settlement offers themselves. These companies will normally be paid a percentage of the amount they save you relative to the original balance. Their primary interest will be the negotiation of cheap settlements not the improvement of your credit score. This means that given the choice they would negotiate a cheaper settlement over the removal of negative information.
I am assuming that you want the bad stuff gone, not just paid, am I right? -
Step 3
Create a form letter (part 1).
It is important that you write rather that try to negotiate over the phone. Trust me. Unless you have had special training and a little practice it is highly unlikely that you will have much success. Some representatives are trained to deny 'pay for deletion' offers as a matter of policy. And you have to remember, these specialists are trained; they will utilize pressure tactics and whats worse, if you call to offer money and they don't like your terms the creditor may sue you. These eventualities are highly unlikely if you conduct your campaign through the mail. While agents CANNOT agree to certain terms as a condition of their employment, your letters will be read by executive parties who can make such decisions as these parties will also be the only ones empowered to deny written correspondence requesting said terms.
You don't need to write a new letter for every new company. Simply make one and change the address and the amounts being offered. This will save you loads of time especially if you have a lot of debt to negotiate.
The trick to negotiating a successful settlement is to offer reasonable conditions. A balance must be struck between the amount of money you are offering, how quickly the debt will be paid in full (and thus the likelihood that they will receive the full amount being offered) and your terms, namely the fact that that you will be asking for the negative information to be deleted. -
Step 4
Create the form letter (part 2).
There are numerous good examples of settlement letters online or you could go to library and check out one of the credit repair kits. These are basically thick books consisting of a bunch of credit repair advice and usually an appendix containing letters. in most cases you can run these letters off, fill in the amounts and send them in.
Regardless of any other advice you may receive, I've had a great deal of success by being sure to include the following elements in my letters:
1. The implication that the debt has just come to my attention, OR
2. Explain, if its true, that the debt is not just yours, perhaps you somehow got stuck with high bills created by your spouse or ex, maybe you got laid off.
3. Imply or at least mention that you have or may be considering bankruptcy. The 'b' word will open doors as it will create the impression that this may be the last chance for the creditor to collect any of the money you owe.
5. Your terms - explicitly state how much is being offered and that exchange for said amount you are requesting that the negative information be removed from your credit report. If you need to split the payments over a few months make it a condition of the settlement offer that the checks not be cash until the day for which they are dated. We couldn't have those greedy creditors leeching too much too soon, now could we?
4. Include the checks for whatever amount you have promised. This is a powerful tool as it is very hard for a person deny any but the most ridiculous terms if they are in effect holding the money (the checks will require special preparation though (see step 5)). -
Step 5
Prepare the checks.
You will use your printer to prepare special checks for this purpose. In the memo line you will print something to the effect that by cashing this check XYZ company agrees to the terms printed on the back.
Then on the back of your check below the 'endorse here' line but above the 'do not stamp endorse or sign below this line' line you will print the terms that you are offering, being sure to note that the payment or series of payments being made is the mutually agreed upon settlement amount and that it pays the balance in full. It is very important that you also note that 'pay for deletion' term. -
Step 6
Send the letters
Mail the letters, with the check(s) enclosed to the address that you got off of your credit report. -
Step 7
The final step is to wait. If your offer is reasonable most companies will cash your checks and you'll hear nothing of the matter again. Wait a few months after the check clears and check you credit report. If there is still mention of the debt dispute it on the grounds that a settlement was agreed upon and be sure to include a copy of the cleared check.
Occasionally you'll come across a company that either refuses to make a 'pay for deletion' deal or expects more money than what you've offered. Some of them will try to call you. Do not let them get you on the phone! If you should happen to answer the phone simply advise the operator that although you are not currently in the position to comment on way or another on the debt about which they are calling you are committed to a mutually acceptable solutions for old debts when they are brought to your attention. Assure the representative that you you are in the process of checking your report and contacting creditors and advise them that they could expedite the process by sending written correspondence. Then hang up.
Refusals will come with revised terms. Either accept the revised terms or make counter offers. In the rare event that you are forced to settle without the agreement to delete the negative information, settle for as small a dollar amount as possible and then try to dispute the information on your credit report after a few months. Some companies do not maintain accounts for which collection has ceased.
