Hit by negative SEO

[CFSSEO]

I think my site got hit by a negative SEO campaign.  We got nailed by the latest Google update and our traffic dropped significantly.  We don't buy links, ask for links, do link exchanges, etc.  Since the last update was all about spammy backlinks, I downloaded backlinks from Google Webmaster Tools just to see if there was any info in there.

There are tons, hundreds, thousands of backlinks from spammy sites to us.  Sites that are spammy as heck and sell backlinks on the footer.  I can only assume someone went after us with a negative SEO campaign.  We're the #3 site in a hot market.

Is the only way to combat this to disavow all those spammy backlinks with the Google disavow tool?  We also have a manual penalty on our site as well.  I've asked for a reconsideration request and have heard nothing.  Please advise.

[KevinBudzynski]

Try contacting the webmasters of the spammy sites to takes the links down before disavowing (see Matt Cutts video on the subject).