This guide provides steps to settling outstanding collection debts on your credit report. Before taking the steps outlined below, speak to your financial coach to learn more about settling your collections.

Confirm that the debt is yours: 
 

1. Find any documents (past bills, collection notices, collection offers) that the lender has sent you. 
2. If the collection agency has not sent you documentation, call the collection agency and ask them to send you proof that you owe the collection.
3. DO NOT pay any debt that isn’t yours.

Collection agencies may resist sending you documentation. However, it is your right under the Fair Credit Reporting Act to receive this information.  
 

Prepare for a settlement:
 

1. Decide whether you would like to pay in full or settle the collection for less than the amount you owe.  If the debt is small or recent, it may be better to pay in full.  If the debt is large or older, it may be better to settle for less.  If the debt is very old, speak to your financial coach first about whether the debt collector still has a legal right to collect in your state.
2. If you are settling the collection, calculate 30% and 50% of the collection balance. These will come in handy later, when you call the collection agency.
3. Set aside (in a savings or checking account) the money you will need to settle or pay in full. You will need to have this money ready before you call the collection agency.
    

Call the collection agency:
 

1. With your documents and credit report ready, call the collection agency. 
2. First offer to settle for a dollar amount that is 30% of the balance that you owe, and aim to settle for below 50% of the balance after negotiations. Remember, the collection agent will try various tactics to get you to pay more money.
3. Agree with the agent for a one-time payment that will settle the collection on your report, but DO NOT PAY YET. Do not provide card or bank account information over the phone. 
4. Demand that the agency send you a Settlement Letter detailing the settlement amount and the agreement.
5. If the agent resists sending documentation, let them know that the Settlement Letter is your right under the Fair Credit Reporting Act. 

Although they are not required to, it may be worth asking the collection agency to remove the collection from your credit report once it’s paid.Try to make this a condition of your payment. 
 

After the call:
 

1. Wait to receive the Settlement Letter from the collection agency.
2. Once you have received the letter, send a check to the collection agency. With the check, include a request for a receipt of payment.
3. Keep all documentation of the transaction for your records.