How to Erase Debt Legally

Erase debt legally by paying off your credit cards and loans.

If you currently have an excessive amount of debt, you are certainly not alone. Many people accumulate debt for various reasons, such as unexpected medical bills and car repairs, buying luxury items they cannot afford, or losing their main source of income. However, having too much unpaid debt on your credit report may damage your credit history and prevent you from qualifying for financing in the future. Fortunately, there is a way to eliminate some of that debt from your life. Learn the proper way to erase debt from your credit report legally.

Dispute Inaccurate Items With the Credit Bureaus

Step 1

Obtain a copy of your credit report from the major credit reporting bureaus: Equifax, Experian and TransUnion. Simply go to and complete the request form online. You will need to provide your personal details on the form, such as your full legal name, social security number, driver’s license number, date of birth, physical address and other relevant information.

Step 2

Review your credit reports for errors. Carefully read over each credit report line by line and make a list of any inaccurate or outdated items you find. Pay close attention to certain details, like the creditor’s name, your account number, outstanding balance and the last payment received.

Step 3

Complete a dispute form with each credit bureau. You can find the appropriate dispute form online by visiting, and You will need to submit a separate form for each item you are disputing. For your convenience, you may submit your dispute form online or via postal mail.

Step 4

Give the credit bureaus an ample amount of time to investigate your disputes. Depending on the nature of your disputes, it may take up to 45 days before you receive a response from the credit bureaus. The credit bureaus must contact each creditor listed on the dispute forms to verify the information in question. By law, the credit bureaus are required to either delete or update any incorrect or unverifiable item that appears on a consumer’s credit report. Each credit bureau will contact you individually with the results of its investigation.

Step 5

Confirm that the proper changes were made to your credit reports. Allow the credit bureaus at least 30 days to update your credit file. After 30 days, order your credit report from the three credit bureaus. Make sure that the inaccurate items have been removed or updated.

Settle Your Unpaid Debts

Step 1

Contact the creditors or collection agencies to discuss your payment options. It is possible that the creditors or agencies will provide you with a settlement offer, or allow you to set up a payment plan to pay off your outstanding debt. In exchange for your payments, ask the creditors or agencies to delete your account information from the credit bureaus once you pay your balance in full. According to Debt Free Destiny, debt settlement will probably not have a major adverse effect on your credit score. In fact, a settlement will only lower your score temporarily. However, failing to pay off your debt will have a greater impact on your creditworthiness for a much longer period of time. So, it is best to take care of the unpaid debt as soon as possible.

Step 2

Get the agreement in writing before your send in your payments. Ask the customer service representative to mail you a confirmation letter describing the terms of the payment agreement. The letter should state your current balance due, along with the scheduled due dates for your payments.

Step 3

Submit your payments according to the agreement. Be sure to make all of your payments on or before the scheduled due date. Once you submit your final payment, ask the creditor or agency to send you a paid in full letter confirming that you paid your past-due balance according to the agreement.

Step 4

Confirm that your credit reports have been properly updated. Give the creditors or collection agencies at least 30 days to update your credit file. Order a current copy of your credit report from the three credit bureaus and make sure that the errors have been updated or removed.

Things You'll Need

  • Credit report from the three major credit bureaus

  • Appropriate dispute forms

  • Settlement offer or payment plan