Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006).
Dear To Her Credit,
Without getting into details of the reasons why, I haven't kept track of who I owe or how much I owe over the last 10 years. I am severely in debt simply because bare necessities (food, shelter) in life came first, and there was rarely anything left over.
I know that not everything I currently owe is on my credit report (because it hasn't been reported there yet). What is the best way to find all the debt that you owe -- outside of consulting your credit report? -- June
Dear June,
Your credit report may tell you more than you think -- it's amazing how much shows up there! But you are right, it won't show everything.
Ex-bankruptcy judge and lawyer R. Glen Ayers says, "There really is no simple way. Even if she pulls a credit report, that will show only those creditors who report problems, and some do not bother to report."
Still, your credit report is the best place to start. Get your free report at AnnualCreditReport.com and use it to start a list of your debts. Make a note of any debts that are not legitimate or that you have questions about.
After you read your credit report, Ayers recommends you do two things:
Make a list of your creditors by referring to your checkbook register, canceled checks, credit card statements, and bills. Don't forget:
Landlords, current and present
Insurance
Utilities
Personal loans (including relatives and friends)
Credit cards
Services; i.e., newspapers, lawn care, and so on
Car loans
The Internal Revenue Service
State income tax
Property tax
Contact each one to find the current balance due.
I suggest contacting each creditor by mail or e-mail, not by phone. If you call, you'll probably get a different customer service representative every time, and often they'll tell you something different, too. Get everything in writing, and save all correspondence.
When you have debts so old you can't remember what they are, your creditors may also have forgotten them or have written them off. Some people may prefer to "let sleeping dogs lie."
Contacting a creditor may even restart the statute of limitations in your state and reaffirm your debt. Statutes of limitations are laws that prevent creditors from collecting very old debts, long after debtors could be expected to remember details or to have adequate records to defend themselves. State laws vary; find the rules in your state.
If you have debts that are past the statute of limitations, you have a choice. If you have the means to pay the debts now and you want the satisfaction of having done so, go ahead and ask for the balance and pay it. (Don't feel obligated to pay outrageous interest and fees they may tack on, however. See How to avoid debt collectors' fees.)
Your other choice is to determine whether you want to pay all your debts that are past the statute of limitations. That may depend on how you got the debt and the dictates of your own conscience. I suggest getting legal or credit counseling help if you have significant old debt. It's easy to inadvertently restart the statue of limitations or acknowledge your debt if you don't know the rules.
After you make a list of the debts you think you have, you must prioritize them.
Pay for the most important necessities of life first, to the creditors who control them. That puts rent or mortgage payments at the top of the list, followed closely by utilities. Pay your doctor if you want to keep making appointments, and car payments if you must have a car to get to work.
Next, work on the debt with the highest interest rates. If two debts have the same rate, paying off the one with the smallest balance first can help you feel like you're getting somewhere.
You should be commended for your determination to get your finances in order and get out of debt. It's hard work, but you should feel a tremendous sense of accomplishment every time you check another creditor off your list!
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: February 13, 2009
Three most recent To Her Credit stories:
Can bankruptcy tap surprise inheritance? – Having filed for Chapter 13, a woman discovers a surprise inheritance and worries whether she has to turn over the funds to her trustee ...
Joint credit cards don't dissolve with divorce – Getting divorced? If you jointly share credit cards, be prepared to cancel those cards and dissipate the debt before things are finalized d ...
Do you marry someone who has big debt? – He may be Prince Charming, but marrying someone who is carrying a lot of debt can put a serious crimp in your ability to plan for the future ...
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
