“Dear Steve,
Time to Face the Dragon?
I have 40k in credit card debt amassed during 2 years of unemployment.
28k of it has been sold to third party collectors. I am now in a position to clean it all up.
I realize now I should have declared bankruptcy.
But it’s too late now since I am employed again. So- to pay or not to pay? I am inclined to try to settle.
How do I go about doing that?
How do I methodically settle debts with collection agencies?
Chris”
Dear Chris,
Let’s slay that dragon.
The first point is I would not automatically assume it’s too late to file bankruptcy. You can’t make an educated decision about if bankruptcy is right for you unless you meet with a local bankruptcy attorney and talk over your specific situation.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
While you might be hesitant about bankruptcy for some moral or religious reason, you appear to have no issue with settling your debt for less than you owe. You can’t maintain one position and exclude the other. Otherwise you would be focused on repaying your debt in full.
My second concern is before you embark on dealing with your debt we need to make sure you are setup on a savings plan and saving for retirement. See this article.
I would also suggest if you want to go the settlement route you save up enough money to pay any settlement agreement you negotiate in a lump sum. Safely you’d need to have about 50 percent of the balance on hand before you start to negotiate.
If you’d like to learn more about settling the debt yourself, here are a number of resources.
Here is a podcast I previously did all about do it yourself debt settlement.
And here are some resources to help educate you about debt settlement before you leap in with both feet.
- Debt Settlement Pros and Cons. My No BS Guide to Settling Your Debt.
- The Hidden Cost of Debt Settlement
Please post your responses and follow-up messages to me on this in the comments section below.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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