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Email: Resolving a Debt in Collections

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I recently received another email related to debt that I’m wholly unqualified to answer so I’m posing this up to everyone who reads in hopes that you will be able to help this person out. The last time I did this there was a lot of supportive comments and I hope this time maybe you could give more suggestions if there are any out there. Without any experience with massive credit card debt myself, I just didn’t feel qualified to speak on the subject and dispense any sort of advice.

Hi Jim,

I came across a link to your site on several days ago. I read and appreciated the referenced article. I knew I had some debt to deal with but since reading your article, things have become more urgent. Of course now I can’t find the link to the article on your site I read originally, but I’m reading plenty of your articles and decided to contact you. Below is my story. I would really appreciate any information you can pass to me.

My situation is a little unusual as it’s not new debt or current debt. I have no credit cards and haven’t for quite some time. I had a company that failed and suddenly found myself without income and unable to make credit card payments. I kept looking for work, but only found temp or very part-time work with not enough to support myself on, living with relatives, etc. My creditors finally gave up on me, particularly when I commented they were eventually going to cause me to have to file bankruptcy (NO, I don’t want to do that!).

Fast forward several years. I began working one almost full-time job, retail, almost two years ago. I was working two part-time jobs beginning a year ago and finally moved out on my own March 2006. In October 2006 one of the part-time jobs became full-time and I’m still working one additional day at the original retail job. I’m living in a rented home I pay only $550/month, but I still have utilities and other living expenses, repaying a personal loan from a friend for a car, car insurance, etc., so I can get to work. I’m also paying off a student loan and paying $25/month to the IRS for 2005 taxes I couldn’t afford to pay at filing time, because some of my 2005 income I was 1099ed.

Still with me? A couple days ago I got a letter from my largest creditor. I haven’t responded yet. I’m looking at what I’m making (netting approximately $1330/month) and what I owe them $13,000+ and I don’t see any way I can offer them a large enough monthly payment to make them want to settle with me. BUT, I owe a total of almost $40,000 (yes, I had excellent credit at one time) and I know it’s only a matter of time before those other creditors come knocking on my door. I don’t know what to do. I’m so overwhelmed and stressed over this. I thought maybe I could find a free debt counseling service somewhere, perhaps a senior service as I’m 58, but I don’t know where to look, and really, what can they advise me? I’m so afraid I’m going to have my wages garnished and lose my job and then where will I be? I won’t even be able to support myself. I’m trying so hard not to become a burden on society, but I’m just at the end of my rope. Do you have any suggestions or resources for me?

ps: On reading the comments to article Paying Off A Debt in Collections, I noticed the last comment by Ralph (comment 17) mentioned a judgment and then a collections company Asset Acceptance. This is the same company that is contacting me. So, it’s a collection on a judgment? I suppose that changes things. *sigh*

One very good trend I’m noticing is that most of the people who do email me have turned things around and are just looking to make things right, which is great. Again, if you have any tips, please do share… collection agencies are horrible horrible creatures (there’s got to be a better way to make a living than by harassing other people).

{ 6 comments, please add your thoughts now! }

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6 Responses to “Email: Resolving a Debt in Collections”

  1. Tim says:

    Is this a collection agency or the bank? I’m guessing a collection agency. If it is a collection agency, do not contact them until you figure out how old the debt is and if the collection agency has standing for your debt. Also find out what your state’s statute of limitations on old debt is. If you contact or acknowledge or agree with the collection agency, and the debt is past its statute of limitations, you have just restarted the clock on the statute of limitations.

    You should go to to review the Fair Debt Collection Act, so you know what your rights are in dealing with collection agencies.

    A collection agency can not garnish your wages or threaten to do so. The only way that your wages could be garnished is by court order, but going to court for collection agencies is more often than not worth it to them.

    i’d recommend going to this site for some very helpful information

    or any other site like it for more information in dealing with collection agencies.

    If you do decide to reply do not promise anything (remember you’ll reset a clock if it is past the statute of limitations). Also, ensure you start annotating everything that happens between you and the collection agency, preferably in some kind of written annotations to and from the agency. As the website states, never do anything verbally with a collection agency. Only in writing, preferrably notorized and via trackable mail.

    Now, instead of bankrupcy, you might try a certified consumer credit counseling (CCC) company. If your debts have yet to be sold to a collection agency, then you can get debt lowered to zero or low interest rates. More often than not, collection agencies will accept payment from CCC, but will not negotiate any better terms. So it is best to negotiate terms with the collection agency. Remember, they have bought your debt pennies on the dollar. If they cannot collect from you, they will more than likely resell to another agency. You need to know what your rights are and what the collection agency can and cannot do. If they overstep, then they are opening themselves up for lawsuit by you. Remember, anything a collection agency does, has to go through a court in the end to enforce.

    The problem with debt in collection agencies’ hands is that your old debt holder (i.e. the original lender), probably has already charged off your account. The charged off account stays on your credit report for 7.5 years from the date of charge off.

  2. Kevin says:

    Tim’s advice seems pretty good, but for more detailed recommendations about your particular situation, go to the credit card forum at and ask for help there. They know what they are talking about, and very willing to help, and I think many there have dealt with Asset Acceptance in the past. It is important to follow the correct procedures when dealing with collection agencies so that you do not lose any of your rights. Seriously, ignore the responses here and go to creditboards.

  3. Tim says:

    Your comment is utterly ridiculous: “seriously, ignore the responses here and go to crediboards”, especially when it sounds as if you have never had to deal with collection agencies or Asset Acceptance before nor can really assess whether creditboards is good for advice judging from the fact that you stated “I think many there have dealt with Asset Acceptance in the past.”

    Having had to deal with several collection agencies in the past, in addition to working my way out of $85k in unsecured debt (i.e. non-mortgage and non-educational), you should not claim that comments on this blog should be “ignored” over any other source.

    What would have been more helpful to the person who wrote Jim, and to others like him/her in similar situations, would have been to simply provide other useful resources. There are many excellent sites out there, not just

    I’ve seen that you’ve posted several times telling people to ignore this forum and to refer to as an authorative source, especially in terms of legal advice. This is ridiculous and seems irresponsible on your part, especially since if you want legal advice you should be caveating and recommending to seek actual legal counsel.

  4. MafiaDon says:

    I think Tim hit the nail square on the head!

    Step 1. Find out who is holding what debt. I have had some past dealings with collection agencies and if possible I usually bypass them and deal directly with the original creditor. Tim is absolutely right. BEFORE contacting anybody gather information. Information is power so find out who you owe, how much, last activity date, etc. and most importantly your state’s statute of limitations.

    Step 2. List all your debts (even if it’s in collections) and run to the nearest CCCS. They will help you formulate a comfortable budget for repayment. The main benefit is not the consolidated payment but the renegotiation of the payment amount and interest rates. Also, once a creditor is informed that you are in a CCCS program usually all communication regarding debt collection is handled by CCCS. So you won’t get those annoying phone calls during dinner or the bright yellow payment notices marked urgent.

    Step 3. Pay them and NEVER miss a payment. And if it is unavoidable, be proactive and contact CCCS & your creditors immediately.

    Note: Some creditors are big a!#holes and will resist renegotiation.

  5. Chris says:

    This is my personal situation, others may differ and I offer my advice as advice only and my disclaimer is of course do your research, use common sense, seek professional advice, etc..

    So, I ended up taking on about $65k in personal unsecured debt from a past relationship. I was struggling quite unsuccessfully in making payments (several thousand in interest payments ALONE!) so I just stopped paying. You can’t get blood from a stone right? Creditors began calling and hassling me, it almost became fun to see if I could anger them enough to hang up on me. Anyways, I went to my personal attorney and asked about starting the paperwork for bankruptcy as I was quite serious, but then my attorney pointed out several things about the process of bankruptcy. 1) because of the seriousness of the issue, you cannot be forced to “complete” your bankruptcy within any particular time constraints and 2) creditors cannot legally garnish wages or persue court while you are in the process of bankruptcy.

    So I’ve been in the process of bankruptcy for about 6 years now. No more creditors calling me. I directed them to my attorney after which they promptly stopped calling. They’ve since taken charge-offs and the fact is that paying your creditors WILL NOT fix your credit. It will still take just as long after the damage has been done, so why kill yourself to pay them? I’m not advocating racking up debt and walking away here but your credit won’t be fixed instantly anyways.

    I’ve also taken the recommendation of several people and signed up for a credit cleaning service. Not a fly by night company, but a respected one. And my credit is on its way to recovery. I don’t know if any of that will help. But it’s worth looking into. I’ve paid about $500 for everything in all and its made a huge difference and definitely saved me from bankruptcy and making my credit even worse by using CCCS.

    One thing you should do is check your credit report to see if anything has already been charged off. If it has, don’t bother paying them because they’ve already gotten the money back in a tax write-off sort of way, so why pay them twice?

    And that’s my two cents…

  6. Tim says:

    again, just a reminder about charge offs. they stay on your credit report for 7.5 years.

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