Make Credit Vultures Prove You Owe

Now, let's spend a little time on the dreaded possibility that you owe money and these credit jerks are threatening to put a blemish on your credit report. So, should you pay up? No way. Don't think that you need to pay them the full amount that you owe. That's the last thing you should do.

Remember, debt collectors buy up delinquent debt for next to nothing -- pennies on the dollar -- so they're turning a profit if they get only 20% or 30% of what you owe. You have the upper hand with these people. They're only predators if you let them push you around. Some collectors might claim you owe late penalties; you don't.

When you negotiate with them, do it by certified letter because that's the only way you should ever correspond with a collection agency, so that there is a record of your correspondence, start low, and don't agree to pay more than half of what you "owe."

Believe me, these collection agents work on commission and really don't expect very many of their "consumers," as they call their victims, to pay them back. A collection agent will be absolutely thrilled if you're willing to pay back half of what they claim you owe (but you should still try to get away with less).

Make sure the collector agrees, in writing, to remove its listing from your credit report. It costs them nothing to do this. You don't want your credit report to show that the account was "paid as agreed" or "settled," because you've still got a collection account on your credit report, and that still hurts your credit.