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Step 1
Do not talk to creditors via the telephone. They are using scare tactics and bullying to get you to pay them. Tempers and issues can best be handled via the mail.
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Step 2
Understand how the collection agency works and its possible motivations. The original debt is usually sold to a collection agency for only 5 to 10 cents per dollar. The original credit granter was paid and wrote off the debt on its taxes. The collection agency will try to collect the full amount at a 90 percent profit.
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Step 3
Understand how collection agencies use fees and interest. Most often, collection agencies will add on fees and continue to add interest, making the amount larger. Any amounts the agencies claim are likely exaggerated and mostly profit. You can't negotiate with the original creditor because your account has been written off its books.
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Step 1
Get your credit report. This step is essential in fighting creditors. There is a free website that allows you to order your credit history once a year from all three credit reporting agencies. This is a federal law. You are guaranteed a free credit report each year if you request one.
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Step 2
Gather all collection letters and past bills you have. Each letter should have a statement advising you of the ability to dispute the claim for up to 30 days. Dispute every charge. This dispute forces collection agencies to show evidence of their claim and the original amount owed. In many circumstances, this will result in the issue disappearing. For the creditors that remain, you now have a 30-day deadline to gather up steam.
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Step 3
Read the credit report. If you find anything that doesn't look right, dispute it immediately using a device called a credit report letter. Check the Resources below for this. With this letter, you will inform the creditors that you have a copy of your credit report and proceed to cite specific accounts or errors on the report. Ask that the information be corrected, removed or resolved as quickly as possible. Sending the credit report letter will stop the calls while the claim is investigated. It will also start a paper trail, which you will need as proof of work.
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Step 4
Prepare a second letter stating that you are aware of the original charges, and that the collection agent has bought the account for a fraction of its value. Offer to pay from one third to one half of the amount due or offer payments you can afford.
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Step 5
For creditors that still claim payments due, send the second letter. This starts the negotiation process and also stalls their collection efforts, as they now must reply and negotiate with you. Do not take their phone calls for any reason.
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Step 6
Continue all discussion via mail and paper trail. Eventually, you will be able to either erase or lower the payment amount.
