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How To Handle A Credit Card Debt in Collections

Advertiser Disclosure: This post includes references to offers from our partners. We receive compensation when you click on links to those products. However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.

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.

My answer:

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!

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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