Carol wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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“Dear Steve,
I let an Amex card that was originally used for business by an associate, but in my name, go uppaid and unanswered. It is now being handled by a law firm. They have filed a lien against any property I may purchase in the county in which I live. I do not have the means to pay them much – maybe $100/month on a $7,000+ balance. The debt was incurred in 2005. I do have other credit card debt, but am managing to at least pay the minimum on them.
Should I try to contact the law firm to work something out?
Carol”
The Answer:
Dear Carol,
Well I guess it is a bit of a double edged sword here. On one side I’m always in favor of establishing direct communications if you have the ways and means to repay a debt you owe. On the other hand I’m worried that if you commit this last $100 a month, which might not be enough to appease the debt collectors, it will leave you so strapped and tight for cash on a monthly basis that you’ll tip into a greater financial mess.
You might be better to save the $100 a month in a boring savings account and then when you get $3,500 saved up you could approach the collector with a proposal to clear the lien and debt for a lump sum $3,500 payment. If you do that, be sure to get the agreement in writing before you send the payment and then send your payment via Fedex or UPS so it can be tracked.
Alternatively, you could contact a local attorney and find out what the statute of limitations is in your state and see how much longer than can attempt to collect on this debt. If you decide to do this, contact the attorney before you contact the law firm chasing you.
Let me know what you decide to do.
