If you are trying to clear up your debt do you pay the collection agency or the original business you owe to and have them try to buy back your debt?

First, you need to gather the list of your bad debt. A great way to do this is to order your credit report. You should begin by listing the amounts you owe, and the people you owe the debt to.

You may find that the companies have sold your debt to collections agencies, if this is the case, then you will work with the collection agency rather than the original company. You need to figure out whom you owe the debt to. Take the time to look over your paperwork very carefully to make sure you are dealing with correct company.

You should order the debts from smallest to largest. Next, you need to contact the companies one at a time. It is best to have the amount you are willing to pay ready.

If the debt is small and less than $500.00, it will be easier to pay the amount off. When you try to negotiate a settlement, you will need to pick a reasonable amount to offer. If you can afford to you may just try having the company drop some late charges and other fees.

If you have the money, it is better to pay the debt off in full. If you are having a hard time reaching someone over the phone, consider going in and discussing the matter in person if possible. Once you have negotiated a debt settlement, then you need to request that they send you the agreement in writing.

This will give you proof that you paid off the debt in full. Once you receive this, then you send the check for the agreed upon amount to the company. This protects you from the company going back on the agreement.

You should send a cashier's check or a money order and not a personal check. You will need to keep this letter with your important documents indefinitely. Once you have cleared up one debt, then you need to move on to the next one.

You will go through the same process with each bad debt on your list. It may take you a few months to save up the money to negotiate a settlement, but it will be worth it. If you only have a few items you should be able to move through the list quickly.