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I’m Not Paying My Bills But Need to Rebuild My Credit. – John

“Dear Steve,

I am currently past due and do not pay payments on my debt. I am aprox. $2500 in debt from two credit cards, a loan, and debt thats being collected from another source from sprint. I have not planned on paying any of these but i need to build credit and fix this.

What is the appropriate way to handle this? Pay off all my debt and try to build credit again via CC, car, etc.. which ever way I can get approved. Or not pay it off and try to get approved for something and put it in the past and start fixing my credit?


Dear John,

The best way to approach this is in two stages. First stage is to close the door on the past by satisfying that debt.

Next stage after you have paid it off will be to focus on rebuilding your credit. Start with a secured credit card that reports to all three credit bureaus. Make sure that you don’t carry a balance on that card greater than 45% of your credit limit. Consider getting a second secured card and do the same thing.

After you do this you will notice a substantial improvement in your credit after six months to a year.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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About the author

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.


  • true, but I’m trying to climb that mountain one step at a time. Actually, I’m thinking in the back of my mind, if I wait til tax return time, I can use some of that money to pay the bill. That’s a ways off til February though, at least the bill collectors think.

  • The one I spoke with will basically do that, he wants $500 up front to get me started with a package I fill out and get him all my info. Then I pay him whatever I can til I get to $1000.00 (on top of the $500) and he moves the case along a little faster the closer I get. The problem I have is getting the $500 to begin with. There is always something that comes up with the kids (school fees, dr visit, luxuries like food, clothing, etc.). I’m stuck between a rock and a hard place. My wife is working all sorts of weird hours (online shopping network)that always change each week, from midnight to 2 am, or 4am to 6am. Than the usual 9pm to 1am. It gets stressful when our young kids don’t sleep thru the night and we can’t think straight. People tell us we need to focus and take time for ourselves once in a while and it’s funny when they say things like “you’ve got to make time, I know everyone can if they want to”. No, not everyone can….:)

  • Steve, checked the link, tried calling, but haven’t gotten thru yet after waiting 15 min. on hold. Will try again today, but it looks like they are trying to help only those in dire situations ie; unemployed, immigrant, handicapped, veteran, etc. I tend to fall into the just plain stupid category…..

    • Justin,

      “Just plain stupid” LOL. No you are not. You actually fall into the working poor chasm which widens every year. You are too strapped to get out and too strapped to stay in.

      You know, some attorneys are offering installment payment plans in the bankruptcy to pay their fees.


  • I still find it hard to believe, even if he takes on a second job. $123,000.00 in 4 1/2 yrs is around $27,000 a yr. They seemed to live in a nice house in a good neighborhood, and with 2 kids, I don’t think they could do it. Anything is possible, including them getting paid to tell that story by the credit card industry. They’re (the credit card industry) under a lot of scrutiny these days and stand to lose out on some unscrupulous profits to be made off the likes of me. If everyone is filing bankruptcy, they lose that cash. Why not tell people that it’s possible to pay back everything, even if it’s a ridiculous amount? Think I’m talking conspiracy theory? What is the point of consumer credit counseling? The innocent non-profit companies that are there only to help the poor consumer get caught up on debt and avoid bankruptcy. Is it that much of a stretch to think, maybe they’re just trying to make money through slightly dishonest or shall I say not full disclosure in their ad campaign?
    Just a thought.

    • Justin,

      I’ve been very critical of credit counseling on this site. A search of ‘credit counseling’ or CCCS will uncover some fairly critical articles I’ve written. I think the video you found is atypical, certainly of my experience in helping people since 1994. I think the greatest disservice the video does is to cast people who don’t want to sleep in their car or get two hours sleep a night as not motivated enough.

      Did you check on that pro-bono link I gave you? Are you eligible for that help?


    • Justin,

      I watched the video and think that it is possible but that few can achieve the end result. You will notice that the key here was freeing up additional money to use for debt repayment each month. If you are just making it month to month that’s not likely. I also don’t think many people would be willing or able to work a second job, sleep in their car and only get a couple of hours of sleep a night for more than four years.


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