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I’m Way Behind on Credit Card Bills and Just Got My First Collection Letter. – Alyssa

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“Dear Steve,

I am way behind on credit card bills and have received my first collection letter. I owe American Express $18,000 on one card and $3,000 on another and they are getting ready to send the big balance to collection. The smaller balance is the one that the first collection letter is for. I have tried calling to negotiate but they want too much money a month. I was laid off in January and don’t want to declare bankruptcy, but instead want to get all my past due credit cards at least in some kind of budgeted payment plan that I can afford. I also have another smaller cards I owe on, a Chase card for a little over $4,000. I am also saddled with about $800/month in student loans, but at this time they are in forbearance due to my unemployed status.

Is there anything I can do to get control of this? American Express does not work with Debt Counselors, so that leaves me to my own devices here. I do not want to declare bankruptcy. I know debt collectors only have so much power and they remind me of a thumb-breaking thug, but do I battle with them, ignore them, or try and settle? Do I wait for the big American Express balance to go to collection, then try and work something out with these people? I know they buy balances for less than the total, so I know why they can afford to settle. I know the game. Please help! I am ready to fight for my financial freedom!

Alyssa”

I'm Way Behind on Credit Card Bills and Just Got My First Collection Letter. - Alyssa by

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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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  • kathy

    Take Steve’s advise. I wish I had filed bankruptcy instead of paying off credit card debt by securing a refinance on my home. Now, I have such a huge house payment and very little credit card debt. The pay off? I may loose my house, but OH YES, I have my pride left. Not really. I feel stupid. I have worked so hard and am lucky to have a secure (as it can be)job for the last 15 years. I got into credit card debt while I was a single mother of two. Now they are grown and I am still paying for their 1st grade shoes & coats!

    My credit was great in 2001 (FICO of 775) and now it is 680 because I was paid Macys late once in 2008! Trust me. If you can’t pay them off without missing sleep and grinding your teeth all night—Bankruptcy. Get a free consult. with an Attorney & if you don’t like him—try another one. You will find an attorney that will help you.

    I wish I had. Read my letter to Steve. And, his answer.

    I’m not putting the “FOR SALE” sign in my yard today. I am shutting off my land line & that will help me pay the taxes I owe. I am also making myself (no matter what) put something into savings each payday & hopefully it will pay my car insurance in a few months.

    Who knows maybe I can bundle up and live with the house set below 60 this winter! I’m going to try!

    All I can tell you is that I wish I had filed Bankruptcy and the people I know that have within the last 5 years have stayed out of debt and have great credit scores and sleep without grinding their teeth!

    You’re worth it. Hang in there. I look at Bankruptcy now as “re-organization” and a second chance.

    HUGE HUG !!

  • Ray

    Hello Alyssa,

    I understand that you do not want to declare bankruptcy, as I feel the same way. But it’s a valid option and makes perfect sense if you have a lot of debt and no employment to pay it off. I’m sure Steve would recommend calling a local bankruptcy attorney and getting a free consultation.

    The other solution requires a steady income. So aggressively try to find a job (or two), sell things you do not need, and get a $1000 Emergency Fund started and stop using credit cards. Then make a list of your debts from lowest balance to highest balance. Pay the minimum on all of your debts and put everything else on the lowest balance until it’s paid off. Then work on the next balance until you get control of your financial life back.

    This may require selling some of the stuff you bought with that American Express credit card. You may have to swear off using credit cards because debt sucks. You may have to stop splurging and eating out all the time, and stick to eating just rice and beans until you get these debts paid off.

    Now if you can’t handle this aggressive approach to financial freedom, then take the free ticket of bankruptcy.

    Hugs! :P
    Ray

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