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…

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.

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 creditboards.com.

I’ve seen that you’ve posted several times telling people to ignore this forum and to refer to creditboards.com 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.

You should go to http://www.ftc.gov 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

http://www.creditinfocenter.com/debt/settle_debts.shtml

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.