Question: What options do I have when I’m being taken to court by a credit collector when both the original creditor and credit collector would not accept the payments I could make? My original creditor sent me to collections while I was paying what I could as a single parent with lots of bills. Then I tried to make a deal with the collections firm, but they refused to accept what I could pay until I got my taxes. Now I’ve been served for court and I have no money for a lawyer. What can I do?’’
– Emily in Missouri
Steve Rhode, the Get Out of Debt Guy, answers…
A common misconception is that sending a little bit of money will keep you out of trouble with your creditor or collector – and keep you out of court. It doesn’t and it won’t.
You get no credit (so to speak) for good-faith efforts. The only payment you can make that will keep the creditor happy is at least the minimum payment you agreed to in your original lending agreement.
Outside of that amount, the next payment that can keep you out of trouble is a lesser payment – but one that the lender agrees to accept. Acceptance requires an offer from you and an agreement from the lender to accept the reduced payment. You don’t get to just send what you can afford.
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What not to do
You do have a very good option, but before we get into that, let’s talk about your very worst option. That would be ignoring a court summons. There’s no scenario where that works out for you. It will lead to more costs and more stress.
By not showing up, you will lose by default. The creditor will get a judgment and go for a wage garnishment if that is available in your state. So first, check out the Debt.com report How to Answer a Civil Summons for Credit Card Debt. That will give you step-by-step instructions for dealing with this serious matter.
The good option
So what’s that one good option? It won’t sound like one at first: bankruptcy. That’s the surest way to legally slam the door on your debt. You will be protected from your creditors, and your debt will be eliminated. Forever.
Bankruptcy sounds bad because it’s serious – and because in the past, less-than-scrupulous people have abused it. But it’s also a legitimate and powerful tool for those in need. Each year, this country sees around 1 million bankruptcy filings.
So where do you start? Bankruptcy isn’t something you do yourself, like a weekend home repair project. It’s akin to building an addition to your home. First, check out Weighing the Pros and Cons of Bankruptcy. Then call a professional, which is required under the law. You can reach that person at Debt.com.