It is always advised that the best way to repair your damaged credit is by trying and settling all your debts. Whenever you trying to settle the debt after the timeline for the payment is over you should expect to be paid two thirds to the full amount. Depending upon the balance that you were the creditor he may be willing to make certain concessions on the principal amount and the interest rate. This becomes even truer in the case when your debt has been written off as a bad debt by the lender. This means that he has considered that amount of debt as a part of his loss and is not expecting to get any part of that money back. The following the basic steps that you should undertake when trying to settle an overdue debt with a creditor.
- Try to reach a initial and tentative agreement over phone or e-mail.
- Make a written copy of the agreement and send it to the creditor requesting him to sign it and return it to you.
- Get the creditor to agree to remove the negative transaction for non-payment from your credit report. He can do this by updating the information that he provided about your credit to the National credit bureaus.
- Send the creditor demand draft or a money order with a receipt that says “Full Payment”.
- Check Your Credit Report to See If the Negative Entry Has Been Removed and If It Hasn’t, Write a Letter to the Creditor Asking Him to Comply with the Agreement That You Both Had. Also Inform the Credit Bureau That the Debt That Still Reflects in Your Credit Report Has Been Settled and Should Be Stricken off.
You should however Bear in mind that an account that becomes delinquent continues to show new credit report for a period of seven years even after it has been made current and paid off. Even though you creditor may be able to take the information with the credit bureau as the account having been settled, the information about its early delinquency or default will continue to show. The only way to avoid this is to contact the creditor before the account becomes delinquent or before the lapse of 30 days after the due date for your payment because this is usually when the default is reported by the creditor to the credit bureau.