Debt Consolidation with a Home Equity Loan

There are several approaches you can take to removing debt collections from your credit report. First, you can try to dispute an existing collection by claiming that the debt is not your own. If you didn't take on the debt yourself, you are under no obligation to pay the debt, and a dispute puts the onus on the creditor to provide proof that you did in fact acquire the debt on your own. If the creditor can't provide this evidence, the credit bureau will remove the listing from your report. It is important to remember that a creditor can't legally collect a debt from you without the necessary information, so it's always important that you make them prove its validity first.

Similarly, some creditors will fudge the delinquency date of a debt in order to make it appear more recent than it initially was -- this tactic can be used to keep a debt on your credit report past the standard seven-year window. If you can prove that this debt has been incorrectly framed to appear more recent than it actually is, contact your credit bureau and file your dispute.

Another method of disputing is waiting for the debt to be sold off to another collector. This is a common practice among debt collectors and can happen numerous times over the life of a single debt -- information sometimes become lost during the exchange, and this loss could make it difficult or impossible for the new collection agency to properly defend the validity of a debt, if it is challenged. The more times a debt has changed hands, the more likely relevant paperwork has been lost in the fray, setting you up for a potential dismissal from your credit report. Be mindful of these exchanges -- they are typically announced by a new collection letter or phone call -- and file disputes when the opportunity arises.

If you are unable to get the debt dismissed from the credit report, your best available option is to work with the collection agency. This isn't always a sure thing and it will require you to pay at least a portion of the debt owed, but it is still an effective approach to cleaning up your credit. Many debt collectors can be negotiated with to have the negative listing removed from your credit report -- this essentially wipes up any evidence of the outstanding debt in exchange for some or the entire bill being paid. But in order to achieve this you will need to arrange the deal with the collection agency before paying the debt. Write a letter to the debt collector asking for them to remove the negative listing once the bill has been paid, or make an offer to pay a portion of the bill. You will need a signed letter from the collection agency agreeing to these terms if you want proof of the deal, which will be important when ensuring that the credit bureaus remove the listing.

If a creditor does not agree to remove the listing, you're almost out of options. You could consolidate debt into one larger bill, if you have multiple outstanding debts, or you can pay them off one by one. Having a delinquency on your record will still hurt, but future creditors will appreciate that you have paid the debt -- this could give you a credit boost in the future.