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Question: I stopped paying my credit cards about a year and a half ago, and would like to pay my debts rather than file bankruptcy. I haven’t kept track of amounts or responded to any collection attempts (except for one credit card, which I settled because they were threatening to sue), so I have no idea who I owe what amounts. How do I go about finding anything out? I just ordered my free annual Equifax report and am confused.
Some readers might wonder, “How can you go 18 months without paying your credit card bill?” It’s not as uncommon as you might think. I’ve seen this same situation many times during the past 20 years. It happens like this…
You fall a little behind on your bills, but you’re still in control (or so you think). Then a catastrophe happens: You’re laid off, you suffer a debilitating illness, you get divorced, or a family member suffers one of these fates.
You run up your credit card bills to get you through the tough times, and because you’re so preoccupied with these major life emergencies, you put those bills on the back burner. Only when the threatening phone calls from debt collectors begin do you consider what to do next.
I’m not sure this describes your situation, Vanessa, but the results are the same either way: You have a problem that you ignored, and now you don’t know where to start.
The good news is: You can dig your way out, and it’s not as hard as you think.
Let’s start at the end of your question and work our way backward.
The free credit report you got from Equifax — and you’re entitled to one free report each year from the three major credit bureaus — helps you learn a lot about your credit wellbeing. (Read more about Decoding Your Credit Report.)
However, it won’t give you the actual account numbers of your credit cards.Equifax codes that information for its own internal use and your protection. So you need to call the creditors yourself. The easiest way? Look for the toll-free number on the back of your credit card, or on your monthly statement.
Do not call back those debt collectors. Go straight to the source, which are the companies that issued you the credit cards in the first place. They’re the ones you need to speak with.
You have four choices, Vanessa. The first is the worst: Do nothing. By writing to me, you already know this is a terrible choice that will haunt you in the long run.
What’s left are these three options…
The most common question I hear about debt settlement is an excellent one: “Why would credit card companies be willing to take pennies on the dollar after I ran up big debts?”
The reason is simple: They prefer to get something rather than nothing. Once a customer is flirting with financial disaster, those companies know they stand to lose out on everything.
However, availing yourself of this option isn’t without consequences. First, be careful of unscrupulous debt consolidators who charge big upfront fees and promise the moon. If you’re serious about exploring debt settlement, you can fill out the form to the right and receive a free consultation.
Second, realize that debt settlement is not credit restoration. Once you’ve satisfied the credit card companies, your credit history is still an open book to lenders. The good news is that you can embark on the credit restoration process all by yourself — here’s our quick-study guide.
The bad news is, this can take a lot of time and energy. You can also hire a firm to do it for you. Again, you can fill out the form to the right for a free no-pressure phone call and decide for yourself.
I know this may seem like a lot of information I’m hitting you with, Vanessa. Take it one step at a time, and you’ll be fine. Also feel free to call us at 888-462-1855 and we can walk you through it all.
Email your question to email@example.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.
Published by Debt.com, LLC Mobile users may also access the AMP Version: Ask The Expert: I Stopped Paying My Credit Cards Last Year. What Now? - AMP.