Settling debts can be a messy affair, particularly for the uninitiated. It can be done, sometimes much better than a debt negotiation service (which typically costs money and mars your credit report). The following tips will provide some insight as to the best way to proceed in your quest.

• Check the status of the debt. If the debt has already been written off or “charged off,” it is a dead debt that cannot be negotiated. Some ways to find out if this has occurred are to check the credit report for the words “charge off,” or try to remember if you received a letter of notification from the creditor that this was about to occur. Also, check your tax records and see if you paid taxes previously on that “income,” because all debt that has been written off is considered income by the IRS. You will receive a 1099C “Cancellation of Debt” form from the creditor and you will have to pay taxes.

• Negotiate a payment plan. Most companies consider a three-month repayment plan equal to a lump sum payment. Hardship or long-term repayment plans can stretch out past six months, even over a period of several years.

• Negotiate interest. You do not have to accumulate interest over the duration of the long-term repayment plan. Although some payment plans come with interest as high as 20%, you can negotiate your way down to zero interest. Don’t forget to negotiate how the settlement will appear on your credit report, an area of negotiation that many people forget about. Remember no debt that has been left unpaid for more than seven years should still appear on your credit report, period.

• Check status of debt and statute of limitations. This is good information to know before going into debt negotiations. If your debt has already been written off, or charged off, it is dead and non-negotiable. Also check your state’s statute of limitations to see if the creditor is still even legally able to try collecting this debt. If you find out they are in the wrong, feel free to correct them next time they call.