A Money Crasher’s reader recently sent me a message about a credit card balance in collections. I thought that you all would benefit from his/her question and how I answered it.
I have a credit card debt of a little of 8,000. It went to collection, and I just don’t have the money to pay it off. I thought I would be able to use my student loan to pay it off, but it didn’t come through. Do you think it would be possible for me to set up a payment plan with the collection agency, and if so, how should I go about it? I know that I won’t be able to pay a lot at first because I just don’t have the money while in school, but once I get done (may 09), I’ll be able to pay it off a lot quicker.
Thanks for being a reader! I answer questions based on what I would do, so here it goes:
I would not negotiate a payment plan with the credit card company for three reasons. They never stick to their promises, they most likely won’t agree to put a payment plan in writing, and they’ll try to persuade you to give them electronic access to your bank account. NEVER give a credit card company access to your checking account. They will wipe out your account, and then you can’t eat.
Instead, get on a written budget and set up your OWN payment plan. Make sure you have enough money to pay for essentials like food, shelter, utilities, gas, etc. Then, with whatever money you have left over, send that to the credit card company each month until you start making more money to pay it off. The company will deposit every check you send them no matter what the collector tells you.
I hope this helps, take care!