Who should I be talking to about my debt?
June 16, 2012 1:44 PM   Subscribe

I have about $10-20k of unsecured debt that is over 5 years old. The money has been discharged to collections and I have had judgements against me.

I have done my free credit report and understand most of what I owe but there are still many questions. I'm afraid to contact any of the collection agencies because I've heard that it can "reset the clock" on debt which might become void after a certain period of time.

Who should I be talking to about my options? My family has referred me to accountants but when I call they say they only deal with tax related matters. I'm not really looking for debt consolidation and I don't want to go to someone deals strictly with bankruptcy because I feel they will push me in that direction without giving me an honest assessment of my situation.

I am in my early 20s and live in NYC. I make minimum wage at best so $10-20k is a huge sum of money for me. I have almost no savings. The debt is the result of stupidity from when I was younger and I feel confident it will never happen again.
posted by laptolain to Work & Money (11 answers total) 12 users marked this as a favorite
One good thing about it having been passed to a collection agency is that by this point you can normally pay back less than what you owe and still clear the debt. The agency had bought your debt for much less than the original amount. So now they just need to make back their investment plus a bit on top. If you make them a reasonable offer you should find you can clear this for less than you think. Don't hide from it- call them and offer something.
posted by KateViolet at 1:59 PM on June 16, 2012

What do you want the outcome to be: Paying the full debts, on your own schedule? Paying part of it? Just getting collections to stop calling? Not paying?
posted by mendel at 2:08 PM on June 16, 2012

Response by poster: Well first of all I would say almost half of the debt is just interest. The accounts were kept open for nearly a year after they were delinquent just collecting debt. These were cards with upwards of 15% APR. So even if I settled for a much smaller portion of the total it could still be a losing proposition.

Secondly, I'm concerned about contacting them because I'm afraid it will put me back on the top of their list of "people who are alive and could possibly pay us." The harassing phone calls will increase and they might even attempt to garnish my very meager pay. I have been hoping to receive letters in the mail to settle so I have a reference point to deal with them but I haven't seen one in over 3 years. Reading a letter is passive action but responding positively to one of their collection calls could again make me seem like a fresh piece of meat.

I'm mainly looking for advice on what kind of professional to talk to. I need someone who can definitively tell me how the system works and how I can get out of this paying the least amount possible without declaring bankruptcy.

(bankruptcy might be an option but I would like that to be a last resort)
posted by laptolain at 2:10 PM on June 16, 2012

Best answer: A lawyer. One who knows collections issues. Three ways to find one:

Go to the courthouse. Look for filings in collection cases - in the lower court, where smaller dollar amounts are at issue. The lawyers who represent the creditors are not your target. You want to find out who represents debtors in the (very few) collection cases that are defended.

Look up business lawyers - in small practices - and ask for a recommendation. It must be someone other than the person you are talking to or his/her partner.

The Lawyer Referral Service.
posted by yclipse at 2:22 PM on June 16, 2012

Best answer: Go to lawhelp.org/NY. Click on Consumer, enter your zip code, call everyone that comes up. These are places that offer free legal assistance. You should at least be able to get some advice from one of those places. There are also fact sheets on lawhelp and findable with the google. Debt collection suits have exploded in the past few years, and there is a lot of good information out there.
posted by Mavri at 2:27 PM on June 16, 2012 [1 favorite]

Call whatever local legal aid agency does consumer debt work. Before you call, gather any documentation you have regarding the debts, the attempts to collect them, your current income and write down what you hope to accomplish, including any questions you have about possible outcomes. You'll go through some screening, which will include assessment of whether to qualify for legal aid, or sliding scale fees.off the legal aid office cannot help, they should be able to refer you to an attorney who can or to another appropriate agency for assessing your options.

You're lucky in that consumer debt is one area that legal aid has suffered fewer cuts in many places.
posted by crush-onastick at 2:32 PM on June 16, 2012 [1 favorite]

Best answer: Debt advisor/counselor. There are financial empowerment centers in NYC that offer free counseling. More info. Look for a federally approved service as there are many scams out there. Good luck!
posted by travelwithcats at 2:32 PM on June 16, 2012

Response by poster: Anyone reading this post with a similar question I highly recommend the links in Mavri and travelwithcats's comment. I am finding lots of useful information there.

posted by laptolain at 2:40 PM on June 16, 2012 [1 favorite]

IAL - a couple of data points:

Merely calling the collection agency to inquire about the debt does not extend the statute of limitations. Making a payment, no matter how small DOES.

Find out (if your goal is to avoid the debt) the SOL in your jurisdiction. In the ones I practice in it is 6 years from the date of the last payment. Don't know about yours.

NOTE: Under the Federal Fair Debt Collection Practices Act you can tell all callers NOT to call you any more and they must abide. You can specify the method of communication, ie. "you can write me letters but you cannot call me." This will stop the harassing calls. If they call after having been told not to AND you can prove you told them not to (keep a journal on this) you can sometimes use the FDCPA to avoid the debt entirely based on their bad conduct.
posted by BrooksCooper at 4:08 PM on June 16, 2012 [1 favorite]

An attorney who deals with debt. Seriously. I was in a similar situation several years ago and it was the best thing I ever did for it. Having someone advocate for you really takes a load of stress off your shoulders.
posted by violetk at 4:45 PM on June 16, 2012

If you make minimum wage at best, try Legal Aid of a similar service, definitely. They can at least give you a decent explanation, generally, of how the statutes of limitations work on various debts, what judgments do to impact that, and what bankruptcy would involve in your particular situation without being financially advantaged by you choosing to declare bankruptcy.

That said, if you make minimum wage and you have $20k of debt, don't write off bankruptcy because it sounds bad. Bankruptcy exists for people to get a fresh start who would be unable to actually pay off the debt, and unless you're sitting on a bunch of assets or you think your financial situation is apt to change in the next few years, that's pretty much you.
posted by gracedissolved at 11:07 AM on June 17, 2012

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