Look at the amount and length of time for the outstanding debt. The longer the debt has been outstanding means the collection agency will be more willing to collect a smaller portion. Calculate how much you can pay or how much you are willing to settle.
Call the collection agency
Sometimes, your account has been sold to many places so start at the company name found on the credit report. You can search online for the company information such as telephone number. If that's unsuccessful, look closer at the credit report for the creditor. The creditor will provide you with the current company that's servicing your account.
Talk to the collection agency
You will probably be transferred four or five times before reaching the correct contact person regarding your account. Be nice. Identify yourself and state the purpose of the phone call. Take down the contact's full name, phone number, and extension number for your records.
Put on your negotiation hat. You will need to be firm about the amounts that you offer. Let them start the negotiation first by asking them how much are they willing to settle. Don't counter with another amount immediately. Ask them, "Is that the best that you can do?"
Give them a time frame in which you are willing to pay. If you pay in one installment, there's more leverage in the negotiation. If there are payments over a period of time, they are less likely to be generous.
The collection agency will likely give another settlement amount. Counter the offer by offering an amount lower than the "can pay" amount. The collection agency will then counter with a higher amount. Repeat your offer again. They will counter again and then you will need to counter. Keep in mind your "can pay" or "willing to settle" amount.
Get it in writing Once the settlement amount has been negotiated and agreed upon, ask that they provide it in writing. Confirm that the settlement amount will be considered a payment in full and they will notify the credit reporting bureaus of the status upon payment. Fax the letter, if possible, since you will have a quicker confirmation of the deal. Otherwise, ask them to email or mail. Remember to get a signed signature on the letter with payment address on the letter.
Settle the debt Make the payment as agreed upon. Include a copy of the letter for their reference. Remind them to notify the credit bureaus of the payment. The next time you check your credit report, confirm that this settlement has been reported as payment in full.