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What would YOU do?

January 18th, 2008 at 03:00 am

We don't have any current debt right now - no house payments (lost the house in foreclosure recently) no car payments, and no credit cards. However, DH and I both have some old debt on our credit reports, totaling something near $15,000. Of course, our credit absolutely stinks. I'd like to improve it but honestly, that isn't the biggest concern in my life right now.

This summer I'll have a few thousand dollars that I could put toward those debts but I don't know the best way to handle it. The money won't be enough to pay ALL the old stuff but it's going to be enough to pay some of the debts in full. But we also need to save some of the money. Keep in mind that we only have about $1100 saved right now, DH owns a 6 month old business with a wildly varying income, and I work retail for slightly above minimum wage, with hours being cut. And soon we'll have to find another place to live.

One of the things that stumps me is that I've read that once I pay one or two of the creditors I'll be contacted by the others wanting their money, too. But I simply can't pay them all at one time, not even if they were willing to take payments.

Should I wait until I have the money then contact a few of the creditors and pay them in full? Should I disregard them and save the money? If I pay off some of the creditors, will the others then come after me?

What would YOU do?

Posted in Savings, Goals and Objectives, Credit and Old Debt | 8 Comments »

8 Responses to “What would YOU do?”

  1. MariRDH Says:
    January 18th, 2008 at 04:04 am 1200629091
    1200629091

    Denise,
    Will you have enough to pay any of the bills in full? If so, I think I would pay those and set aside any extra until I had enough to pay another account in full. That way you aren't teasing any company with a partial payment.
    Another thing I would do is call ahead, explain that I will have the money to pay the bill in full and ask if they would consider reporting your account as "paid as agreed/in good standing" or taking it off your credit report altogether? If they agree to either make sure you get it in writing before sending the payment. It is always worth a try to improve the credit score. Smile

  2. denisentexas Says:
    January 18th, 2008 at 04:10 am 1200629453
    1200629453

    That's pretty much what I figured I'd do but man, this is confusing!

    There will be enough to pay some of the old things in full. On our credit reports there are some charge offs, too. Should I ignore those or pay them?

    Argggh! lol

  3. baselle Says:
    January 18th, 2008 at 06:24 am 1200637489
    1200637489

    I won't pay a thing until I consult with a credit counselor or a bankruptcy lawyer and come up with a payment plan with a list of payees in descending order. Waving savings in front of creditors is like waving a blood bag in front of a flock of vampire bats.

  4. Lost in Debt Says:
    January 18th, 2008 at 10:12 am 1200651171
    1200651171

    You should get a free copy of all of your credit reports at www.free3creditbureaureports.com, then make sure that the items are valid and not duplicate debts. Sometimes multiple collection companies will report the same debt because junk debt buyers sell your debt. You can work with the credit bureaus reporting your information to find out phone numbers and addresses of collection agencies and creditors. Once you are sure you owe the debt, you then can negotiate a settlement. Get the settlement in writing before you write the check. Once you have settled the debt, be sure to write to the three major bureaus and provide them evidence that the debt was settled.

    It's one day at a time and one creditor at a time, don't let it overwhelm you.

  5. Ralph Says:
    January 18th, 2008 at 10:46 am 1200653211
    1200653211

    It sounds to me like it may be too early to think about paying off old debt, so maybe you can just make the best of it by continuing to build savings and staying away from credit, although I'm sure that's easier said than done. From your posts here, you sure sound way overqualified for a near minimum wage job, so I think you definitely should continue to be on the prowl for something better.

  6. Ima saver Says:
    January 18th, 2008 at 02:50 pm 1200667854
    1200667854

    I would save the money until you have enough to pay it all off and still have an emergency fund left over. Do not charge anything else.

  7. nance Says:
    January 18th, 2008 at 05:19 pm 1200676742
    1200676742

    I think "Lost in Debt" has given good advice. I think you can get some of the creditors to agree to a settlement. GET IT IN WRITING! This would get rid of some of the penalties, late charges, etc. I would wait until you have money saved for your living expenses though.

  8. denisentexas Says:
    January 18th, 2008 at 05:22 pm 1200676941
    1200676941

    Okay, thanks for the suggestions, y'all. I'm going to consider all this awhile. I think having savings is very important but I also want to deal with the debts. I just have to figure out the smartest way to do it.

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