I need some guidance, please help.

[whatnow]

I've stopped payments about 2 years ago on two separate credit cards. I owe roughly 1,000 in total and both cards have expired or been defaulted earlier this year. I've made no attempts to contact the creditor or any collection agency and I've become increasingly anxious because I am not sure what steps to take in order to rectify this.

Someone told me that debt settlement will worsen a credit score, but if my score is already in the dumps (assuming due to situation) then how much of a difference would that make? Then I found out about the 7 year rule about credit scores. I would appreciate any advice on what my options are at this point and which would be the best way to go. I certainly don't want to make things worse!

*edit*
I realized that I'm not even sure exactly how much I owe since I've been told that debt collection letters aren't entirely accurate. If this is the case, should I contact the creditor directly?

[whatnow]

I'm not getting much help on other forums, so any advice is greatly appreciated. Thank you.

[DavidBibby]

Whatnow...

Don't worry about your credit score. The fact is you've already damaged it enough by not paying on it for the last two years. Paying it off in full or settling it would ensure that no more adverse reporting is being done to it.

First thing you need to do is FACE the problem. Call up the creditors and find out what is owed right now. It may help if you have have $500-$1000 saved up before you make the call.

If you owe $2000 because of fee's and charges... they may settle it for the $1000, IF you HAVE it right then.

If not, they will try to get you do a payment arrangement and pay off the full amount.

Do not give them access to your account.

Hope this helps...

[whatnow]

Thank you DavidBibby for your reply.

Just to clarify, the first and most obvious step would be to call up the creditor and ask them exactly how much I owe, but how would they be able to answer me unless they have access to my account? I'm a little confused. Unless I'm confusing creditor with the collection agency?

I only have a couple hundred dollars right now to spare and probably can't get 1,000 until the end of this year. Would it be better to wait until then or go ahead now and make a payment arrangement? I'm trying to avoid getting sued, which I didn't even think about before.

I apologize if my questions seem embarassingly stupid, I'll admit I lived with my head in the clouds until now.

Again, thank you.

[DavidBibby]

Whatnow..

You are correct.. you'd want to call the collection agency in order to find out how much you owe. Collection agency's CAN make payment arrangements but they usually require you to give them your bank account information so they can pull money out of your account each month.

In my opinion it would be better to wait until you had something substantial to offer them before you call. That way.. when you call them... you can say:

"I've got $1000 cash today... take it or leave it."

However.. if paying $100 a month is do-able for you.. then a payment arrangement may be your best option.

If you show the collection agency that you are SINCERE about repaying... then they will work with you.

Hope this helps...

[whatnow]

Thank you very much for all your help. I think I can wait out a few more months in order to pay the majority of the debt in one shot.

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