After going to collections, do I still have to pay?

Question

I have just a little over $20,000 in credit card debt. Its about 5 different credit cards and I havent paid them in 4-7 months. Some are in collections already and I have received a letter from an attorney. I called a few consolidation places, and debt settlement places but they want a payment of $500 a month and there is no way I can afford that. Does anyone know what I can do?

Answer 1

Yes.If they've gone to collections or an attorney then they're on your report(s) and marked key derogatory or 30,60,90,120 days late.Sometimes the creditor will sell these written off accounts to resurgent companies.At that point you should contact the resurgent company and dispute with all three bureaus.
Once you dispute an account that's sold or written off the creditor has no claim to it anymore and will not reply to the dispute.Then the bureaus will remove the information.I did this very same thing and am paying Capital Management only 2477.00 back on 7079.00.They buy these accounts for just a few cents on the dollar and don't report to the bureaus.Resurgent companies don't want your credit ruined.
Bankruptcy is the very last resort.It screws up your credit almost as badly,and yes these bankruptcies go on your reports.
Barring any of this contact an agency(like the ones you see commercials for) and they can help reduce your payments.I have to do this with my evil ex-wife because I unknowingly married into 27,000.00 of credit card debt.I think we used Credit Guard but I try to think of that experience as little as my failed marriage

Answer 2

Yes you do have to pay it....and then some after it goes to collections. Why did you not pay? This is going to effect you for years to come if not taken care of quickly. I don't think the Debt Consolidation places are very good....I've heard that if you pay your $500 per month, sometime they "forget" to pay your creditors. If an attorney is trying to contact you, they very well may try and sue you (and win) and garnish your pay checks. Advice I can give you....call your credit cards and try and work out a "settlement" with them (if you can afford it) and pay them off for a certain amount less than you owe, OR make monthly payment arrangements. Most will work with you because they would rather get SOME money from you than pay an attorney to sue you and then they only receive a portion of it. If you still can't afford it, maybe consider a 2nd job? Bankruptcy should be your last option and it's very hard to file now days (credit cards are considered a "luxury"). Good luck, I wish you the best

Answer 3

If you write to each one, explaining that you are no longer able to service the debt at present and offer them the following choice, they will almost always take option 2.

1. Explain that you cannot afford to pay the amount - nor do you have any assets that can be sold. You regret this but unless they are prepared to consider option two, then your only way forward it to go for bankruptcy. Explain that this will result in little if any money being released (assuming this to be true) once preferential creditors are paid (IRS etc, secure loans etc)

2. they agree to remove ALL interest charges from the account, freeze interest indefinitely and you will then agree to pay off what you can reasonably afford to do - perhaps a token payment of $25 per month "until such time as things improve".

In a surprisingly high number of cases, they WILL agree to this - especially if you explain that you are in a position to make a payment immediately if they agree. The only point then is you MUST keep your word and maintain the agreed minimum payment.

Other than that, see if there are any "debt advice" services that are operated by charities etc that might give you free impartial advice.

Answer 4

The best thing to do is call and be honest. Let them know you can't pay the bills. They should work with you and put you on a payment plan. Even if it went to collections, you still have to pay the debt. Debt doesn't disappear. You can ignore it, but it doesn't go away.
This is very very bad for your credit. Now you also have to clean up your credit. Go to experian and pull your credit report. See what you have to pay off. Get in touch with each company and tell them you want to pay off the debt, but don't have the money. You can ask them to lower the debt to. Some times they are willing to get a partial payment then nothing at all. I encourage you to take care of this matter right away. This is going to cause you lots of problems in the future if you want to buy a house or get anything having to do with financing.

Answer 5

You either have to pay, or declare bankruptcy - you did incur these debts, after all.

Bankruptcy is not a panacea. In the USA, it puts a black mark on your credit history for seven years, making it more difficult to get a loan that you really need.

Have you spoken to the collection agencies? See if they will agree to payments that are affordable to you, and, stop using the cards!

Answer 6

1) Destroy all cards.
2) Make yourself a monthly "realistic" budget.
3) Contact each card & inform them of situation you are in but you want to handle this debt by paying instead of filing Chpt 7.
4) Ask each one to suspend the account. Make sure this will stop the fees & sometimes interest (depending on company but YOU need to address it).
5) Make your payments by money orders (NO checks).

Otherwise if you can't do this then you will either file Bankruptsy or go through the consolidation company. But the above out line is basically what they do. The $500 monthly fee is used to make the payments for you after they have contacted everybody & did what I layed out above plus a nominal fee for their assistance.

Answer 7

Why did you stop paying them during 4-7 month? You should call
more consolidation place and find one that can give you a lower payment plan.

Answer 8

If you cannot work something out with each individual company, then I am afraid bankruptcy is your only solution. You will never get that much credit card debt paid off after you add on interest, attorney fees, etc.

Answer 9

Ring one of those credit companies with the REALLY annoying adverts like LoanDirect...we could consolidate all of your debts into one low affordable monthly payment! AHA! maybe u dont have those in america but...yeh.

Answer 10

Well, if you want to get out of paying it, you're screwed. The only LEGAL option i know of to get debt excused is by declaring bankruptcy. Otherwise, you need to make some sacrifices in your spending. If you try to blow it off, you'll screw up your credit for a very long time.