Old debt or bad debt can keep you from getting things like an apartment, a car or even a job if potential employers run your credit report. About.com helps you get those old debts paid and you on the route to sound money management.
Your first step should be to order a copy of your credit report. Then you should make a list of owed amounts and who they are owed to. Sometimes the company you owed your debt to will have sold it to a collection agency, in which case you will be talking to them rather than the original company. Put your debts in order from smallest to largest.
Now you will reach out to the companies one at a time, usually by phone, but if you are having trouble reaching a person, you may need to talk to someone face to face. Have a reasonable amount you can offer the company and be prepared to negotiate. You will have the best luck if the debt is small, less than $500, and if you can afford to just ask the company to drop some late charges and fees and pay the debt in full.
Once a debt settlement has been reached, ask the company to send you the terms in writing so you can have proof that you’ve fully paid your debt. After you have received this, you can send a money order or cashier’s check (not a personal check) for the amount, confident the company will not go back on your agreement. Be sure to keep the letter with your important documents.
Go through the list, one debt at a time, following this same process until you are debt free. Once you finish the process, be sure to make a budget that you can live within and stick to it to prevent falling into the debt trap again.