At what point should I start using the Disavow Tool?

[Rawrishly]

I've recently started working at a company with a moderately successful website. In the past, this company paid a SEO company to do work for them who purchased many low quality links for them. I'm trying to work at improving their rankings, and I wondered if I should be trying to remove these links and to what lengths I should go to removing these links. We have not received notices for our links, but I know that many of the links are bad. I've started contacting site owners to get these links removed, and thus far all the sites are charging for link removal. At what point should I start using the disavow tool? Should I be paying for link removal, or just go straight to using disavow? Or should I not even worry about getting rid of these links since Google hasn't seemed to take notice anyways?
Do any of you have any recommendation as to how I should approach disavowing as well? Should I add sites/pages to the file in increments and watch to make sure that it's not harming my ranking too much?

[goodroi]

My experience is that it is usually better to disavow early and often. Every situation is different so this might not be the best idea for your specific situation.

To help others give advice you might want to share your definition of bad links.

[tangor]

but I know that many of the links are bad.

Check with management, express your concerns, wait for the go-head... and once obtained disavow those links first. Then go after the others in a more targeted way as not all low performing links are BAD links.

[Barbados]

We've had to do a lot of disavow files and in most cases we've found them to be a waste of time. If the links are the type where the sites are now asking cash to remove them then they are definitely toxic.

Our approach has been to disavow them all in one hit as if they are bad then by definition they can't be helping your ranking.

Be aware though that disavow does not get rid of the problem, it simply sends a message that you don't want to be associated with them. The only way to deal with this is to actually remove them and if you have to pay then it's generally worth it as long as they are not fleecing you.

If there are a lot however I'd move domains as its cheaper and more effective. We've just done this for two clients who got stung by previous SEO's, moved them from .co.uk to .uk and by using the htaccess file and not 301 ing the domain managed to dodge the bad link juice. One of them is back on page one now and the other slowly working their way there.

[Rawrishly]

By bad links, I'm referring to sites that seem to be nothing but link directories that point all over the place, or sites that are malicious and auto download questionable files.

Thank you all for your replies.

[kiril19]

If you think the links are bad, and can do more harm than good, start disavowing right away... the sooner the better...