Don't agree to debt repayment you can't afford

To Her Credit columnist Sally Herigstad
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). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question Dear To Her Credit,
A few months after I got a new credit card, I lost my job and couldn't make my payments. I searched for a new job to pay my credit card bills, but no one would hire me.

After a long year, I found a job I really like. By then, my credit card account had gone to a debt collection agency who wanted me to pay the full amount. I said I couldn't do that, but that I would slowly do payments if possible. They said I could make payments, but I had to pay $500 down first. I told them I can't afford $500, but they are insisting.

I have nowhere to turn. I have tried my hardest, but they only want $500 down and then payments. I don't know what to do. I really want to fix my credit, but $500 upfront is just too much. I have to feed my kids and family, and I have other bills, too. What do I do? -- Angela

Answer Dear Angela,
You are right to stand firm and not send the debt collector more money than you can afford to. Your first priority is feeding your family and keeping a roof over your heads. Next, you have to prioritize payment of your bills, including credit card bills. When you've been unemployed for an extended period of time, it's going to take some time before your creditors get all their money.

If there's a way for debt collectors to get to the front of the line and get paid before any other bills, they try to find it. You can't blame them for trying. Telling you that you have to pay $500 now is a nice try,

It is important to keep working with debt collectors to avoid legal action, including possible garnishment of your wages. You don't have to cave to all their demands, however. Follow these steps to deal with a debt collector:

  1. Learn about your rights as a debtor. Many people allow debt collectors to intimidate them or make their lives miserable. The Fair Debt Collection Practice Act protects you from harassment; for example, collectors can't call you after 9 p.m., and they can't contact you at work if you tell them not to. They also cannot threaten you.
  2. Make a budget. You don't know what you can afford to pay until you make a monthly budget that includes your income and all your expenses. Without a budget, it's just guesswork.
  3. Try to negotiate more with the debt collector. You've been communicating with this collector, which is good. Be sure to keep notes of all your correspondence with them. Don't let them take the money you need for basic necessities, however, or jump in line ahead of all your other creditors.
  4. Seek help if necessary. If you can't make headway with the collector, I recommend you contact a nonprofit credit counselor affiliated with the National Foundation for Credit Counseling or the Financial Counseling Association of America. A counselor can help you see all your options, make a budget and deal with debt collectors, all at a low cost.

Now that you have a job and income, you can start taking control of your financial life. Don't let a debt collector intimidate you or scare you, however. Stay in control, so you can take care of your family, your finances and your credit.

See related: What to say (and NOT say) to debt collectors, 8 things debt collectors may not do

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Updated: 01-20-2018