Question:
Dear Steve,
I do have Macy’s and PayPal account which I am thinking of trying to settle. I did settlement back in 2010. Everything went well as far as my finances is concern from 2012-2015.
Unfortunately, I got disabled and now on permanent disability. I am still current on my payments, though I am just paying minimum payment but would like to get all this out of my head. You think those 2 creditors will settle even if I am still current on my payments?
Thank you so much.
Answer:
The reality is they will most likely not settle the accounts while you are current. It’s just that the ability to offer certain solutions is dictated by the policies and procedures of the creditors based on how delinquent you are.
People who are current on their accounts have different solutions available than people in the collections department further down the delinquency.
It is what it is.
The issue is if you can afford the payments or not based on your current situation. If you can’t afford your payments then you will face no other choice but to eventually default.
If your current income is from disability benefits and you have no real assets to speak of then you might be what people call judgment proof. This means while you could be sued for defaulting on your debts, you may be protected from judgments and garnishments.
So I am going to assume you will be unable to afford your payments based on the change in your circumstances. In that case I would suggest letting the creditors know what your situation is and that you can no longer afford to pay.
I don’t see any reason to dodge their collection calls and in fact I would suggest being polite when the collectors call and just keep explaining the situation that you are now permanently disabled and can no longer afford the payments.
Once you get about 90 or more days delinquent you will fall into buckets that can offer you alternatives like a settlement. I would not be surprised if the creditors didn’t proactively offer you a settlement offer around that time.
However, based on your current situation, if the amounts you owe are large and the settlement amounts would drain what limited resources you might have, you need to consider if you can even afford to settle the accounts.
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