I have so much debt and past due collections. What do I do? I can't afford to pay them all back at one time.

Question

I was denied for a home loan and now i feel like a loser. How can i fix this without going completely broke? Please help!

Answer 1

The company should have given you a reason why you were denied. Start by looking over the info and seeing where you can make changes.

You didn't give enough info in your question for me to give you a real answer but I would say start by settling past due debts, paying off anything in collections, medical bills, etc.

You will not have to pay everything back at the same time, as you said, but you can work out a payment plan with some of your creditors. They may settle for 50% of the amount owed (but you will have to pay that amount in full). Take it one at a time until you're out of debt.

Hope that helps!

Answer 2

Don't feel like a loser. Bad credit can happen to anyone. Here's the advice I give to my clients:
How do you eat an elephant? One bite at a time. If your credit report looks like an elephant to you, take one bite of it and make your first bites small. Here is what I suggest:
1- Pull a credit report from all three bureaus. They don't share information w/ each other and you want to have a complete picture of everything that's out there.
2- If you have judgments or liens, make those your first priority as they hold a lot of weight with lenders.
3- After you have paid or settled those, start with the smallest collection/charge-off. If you cannot pay it in full, try to negotiate with the collector. Bear in mind that if they agree for you to pay a smaller amount than what you owe, they will probably want the money in a lump sum. Be prepared for that. Keep working your way up.
4 - Each time you pay off a debt, make sure you request a copy for your records. Sometimes, the collection agencies do not report this to the bureaus. As consumers, we have to do that. It's not a big deal. All you need is a copy of the receipt and a stamp.
5- Be aware that when you start settling and paying off collections accounts, that brings other collectors out of the woodwork. Your phone might starting ringing inceasantly. Just let them know that they're on your list and you'll get to them when you can.

On a side note, most mortgage lenders will want to see that you have no open collections, charge-offs, judgments or liens. 620 is usually the score that they want to see in order to start giving you a decent interest rate. If you do not have any decent open accounts on your credit, ask your lender if they will consider non-traditional credit. If you pay your rent and other bills on time, they can use that to decide your loan instead of traditional credit.
Good luck to you!
:-)

Answer 3

You are not a loser. This is a blessing because then you won't be getting foreclosed on after you can't afford the house.

First, get out of debt. Gather all your bills, past collections and current bills. Make a budget on all the current bills and necessities (utilities, rent, food, car maintenance/payment, etc). Hopefully you will have money left over. Use that money on the debts.

"Wake up" one past debt up at a time. How do you decide which one? Line up all the past delinquent debts in order of smallest amount to largest and call up that debt when you have the money and offer a settlement- get it in writing and then send them the money. (DO NOT give them access to your savings/checking account.) And then start the same process with the next smallest debt.

I also suggest you read The Total Money Makeover by Dave Ramsey. His book will give you examples of written budgets, why you should get out of debt, how to talk to collectors, etc.

You can do it, it may just take a little time.

UPDATE: don't do debt consolidation, it doesn't fix the real problem, your behavior that got you into debt. Plus their "service" comes with a fee that you can do yourself.

Answer 4

First, you're not a loser. This is a common problem.

Next, create a budget - I use an excel spreadsheet. How much income do you have - after taxes?

Then, how much money are you spending. How much for rent, groceries, phone, cable, etc? How much to each creditor (min. payment)? Are you spending money you don't have to? For example, did you have to buy that game last week? Are you eating out more than necessary when you could be spending less and cooking at home?

Start making minimum payments and concentrate on your lowest balance. As you pay one off, add that payment to your next lowest and keep going.

All I can say, I work out payment arrangments with past due collections. If you have extra money, see if they'll consider a settlement.

In the meantime, time heals credit report scores. Pay your bills on time, watch your credit limits, and avoid applying for credit.

Answer 5

Try to consolidate you debts. Consult with a debt consolidator for help and try to consolidate all your debts. They will reduce the amount and also lowers the rate of interest. You also pay only a single payment against alll your bills.
For home loans try some online resources apply for free quotes and then see if you are approved.
To know more you can visit
http://www.debtconsolidationmanagement.blogspot.com
and
http://www.easyhomeloans.blogspot.com

Answer 6

There is a great place to go with this. I was in a very similar situation.

This is getting help from real people without the use of banks or credit card companies. Good Luck!

http://www.prosper.com/join/Lzc5wh

Answer 7

I had the same problem. I went to my bank to get a consolidation line of credit(its a creditcard not a loan) but my scores were to low. there are also signature loans or personal loans at the banks but you need some kind of colateral or home equity. oumight try an indepedent leanding group thats were I got my consolidation. good luck! prosper.com
http://www.prosper.com/lend/listing.aspx?listingID=178587&referrer=familyindebt3&utm_source=referrer-familyindebt3&utm_medium=referral-link&utm_content=link&utm_campaign=referrals-listing

Answer 8

pay off one at a time, and see if your can be put on a payment plan

Answer 9

credit counseling.

get a referral to an honest outfit from the banks you owe money to.


GL