Question: Hi - I am in big trouble with credit cards debts, which the amount is about $25,000 with the interest in them. I stopped paying them back in 2003-2004. Now I am trying to get back on track, as you will know all of them are in collection, two of them are already in judgment, which have become a public record. I started dealing with some collection and I have paid one off. Now my question is, should I keep making deals with those collection agencies and especially what should I do with the ones already in judgment? Thanks a lot, I would appreciate your answer.
Bronx, New York
Answer: Hello Santiago. I'm happy to hear that you are getting back on your feet and rebuilding your credit. The best course of action for you is to get all of your past due bills paid or settled. That way you can focus on the future rather than run from the past.
Contact all of the collection agencies who have placed collections on your credit reports and tell them to you want to settle. Start at 10% of what they say you owe, which will appall them but now they know what you're willing to pay. Eventually you'll come to an agreed upon amount and then you'll be done. Be sure to get whatever deal they make in writing. It's amazing how many collection agencies forget about their promises once they've been paid.
As far as the judgments, that's a little more complex. They don't really have to settle for anything less than the amount they say you owe because they have the courts on their side. And, if they wanted they could compel you to pay by either garnishing your wages, your tax returns and even force you to liquidate assets in order to cover the debt.
Contact the attorney representing the creditors, you probably have that information from the service paperwork that was sent to you before your court date. Tell them that you are ready to make good on your debts.
Only you know what you can afford and I would never advise someone to pay less than what they really owe. If they are willing to accept less than the judgment amount then consider yourself fortunate. Good luck!!