Ignoring debt collectors won't make them go awayBy Todd Ossenfort
Dear Credit Guy,
I was just wondering if bankruptcy is the best way to settle a debt. I'm out of work now and cannot afford to make any kind of payment. I have been delinquent for five months now, and I have received all kinds of mail and calls from the credit card and collector's company. What I have been doing is avoiding the calls and the mail since I have nothing at this time to offer them. Please advise me on what to do. Thank you. -- Mo
Dear Mo,
Very first thing -- stop ignoring the situation. I know that burying your head in the sand like an ostrich and hoping it will all go away may seem like the right thing to do, but it isn't. I understand why you would believe that it might be pointless to communicate with your creditors since you have nothing to offer in the way of payment, but it is critical that you open the line of communication and keep it open. The reason communication is so important is that with no input from you, your creditors have no way of knowing that you are unable to pay. The only thing they know for sure is that you are not willing to communicate about the debt you owe.
You need to return the phone calls and let the creditor know that you are aware that you owe the debt, but that you are currently unemployed and unable to make payments. Keep the conversation short and to the point. If the collector starts to pressure you to bring some type of resolution for the problem, end the call by saying you will be back in touch when and if your situation improves. Keep records of who you spoke with, what was said and when you made the call. Getting the collector's first and last name is helpful.
Next, you will need to decide how to move forward. I would recommend you stay focused on finding employment so you will once again be earning an income. Desperate times call for desperate actions. At this point, I recommend taking anything you can. There are jobs available to those who are willing to work. It might be waiting tables or stocking shelves, but it is a job that is providing income. Once you have become employed again, you will need to decide how much of your income you can set aside each month to retire your debt. Keep up the job search until something in your field becomes available. It might take a year or even two, but keep at it.
Once you are employed again, you should then contact the creditors and let them know what you previously decided you could afford to pay per month to satisfy the debt. If they are unwilling to accept what you can afford to pay, do not promise more. In circumstances where the creditor is unwilling to accept what you can afford to pay, I recommend you seek professional help in dealing with the creditor. A qualified credit counselor can assist you in this case.
Should your underemployment continue, and it looks like it will remain that way in the foreseeable future, then you may need to consider contacting a bankruptcy attorney and exploring your options for filing bankruptcy. Since your accounts are already five months late, it may be best for you to take advantage of the clean slate that a bankruptcy provides for people who no longer have the means to pay what they owe. I suggest you contact a certified consumer bankruptcy attorney. You can find one near you by visiting the American Board of Certification. Keep in mind that a bankruptcy will negatively affect your credit for seven to 10 years, but is a legitimate alternative for those who might need to take advantage of filing.
Take care of your credit!
See related: Take control of debt, avoid bankruptcy, Bankruptcy does offer fresh start, at a high cost, Pay off credit card debt or declare bankruptcy?
Todd Ossenfort is the chief operating officer for Pioneer Credit Counseling in Rapid City, S.D. Pioneer Credit Counseling has been a member of the Association of Independent Consumer Credit Counseling Agencies since 1997.
The Credit Guy answers a question about a debt or credit issue from a CreditCards.com reader each week.
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Published: May 11, 2009
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