If one needs to be peaceful, he should be clearing bad debt at any cost and getting rid of it come what may, especially when he is planning to do some major investment.  It helps you to clean up the credit history. Bad debt is one which is not currently active or has stopped repayment and which is still in the collection mode.  If one works cautiously, he might be able to If you work carefully you may be able to bargain to repay much less than he is liable, since many factoring companies purchase the bad debts for much less than you owe.

Step 1: One needs to collect the list of his bad debt, and the better way to do this to get the credit report.  He should begin by recording the amounts he owes, and to the party he owes the debt to.  To his surprise, the companies might have sold his loan to collections agencies, and if that be true, it is good to work with the collection agency rather than the initiating company.  
Step 2: It is good to contact the companies one by one and if so, it is better to have the amount ready which he is willing to pay.  If the amount outstanding is as less than five hundred dollars, it will be simple to pay off.  When it is discussed with the issuing company, it is healthier to offer a good amount to negotiate a settlement.  If he is unable to get the company or contact person over phone, he can consider going and discussing the matter in person.
Step 3: As soon as the negotiation is over, one needs to request the lenders to send a written agreement which will give him the proof that he has clear off the outstanding in full.   He can send a cashier’s cheque or a money order for the agreed amount to the company so that the company would not withdraw from the agreement.    He needs to preserve this letter with the other key documents for a long time.
Step 4: Once having cleared the first debt, it is better to quickly move to the next one which would help him to clear the outstanding debt soon.  The same procedure as mentioned in step 3 can be followed for clearing of all the debts which is on the list prepared initially.  To negotiate a single pay-off settlement,   it may take several months, but it is worth suffering initially.  Whenever, the list of outstanding debts gets reduced, it gives immense joy, and it will help him to move through the list quickly.

There are some tips as to how he can go about clearing bad debts:

• One should start on the list of outstanding debts and other bills, and also, he may also set aside dealing with the bad debts till such time when he has worked further on his debt snowball.
• It is vital while negotiating a debt settlement, since any outstanding debt that would be written off is considered as income.  
• He should work on a strategy that would take care of legally paying off his bills apart from his debts.   It is advisable to prepare a budget, get out of debt and to set aside money each month.  This, in turn, will prepare him for any exigency and at the same time reduce last minute shocks and surprises.

Clearing bad debt always gives immense happiness and a sigh of relief since it releases a man from his depression, anxiety and mental sickness too.