How to Deal With Delinquent Debt

Dealing with delinquent debt is tough if you don't have money to pay your bills. People who fell behind on their bills because of an illness or job loss can rebound by permanently resolving their debts or by making payments to bring them current, if possible. The key is having enough money to fund a reasonable plan for dealing with your delinquent debt. It's possible to deal with the delinquencies even if you have just a small amount of cash relative to your overall past-due balances.

Instructions

1

Rank your debt according to delinquency. List bills that are late by 180 days or more at the top and work down from there as you list bills that are 120 days late, 90 days behind and so on. Refer to your billing statements or call the creditor to get the information. Also note if the original creditor is still managing the delinquent account or has transferred it to a debt collector.

2

Make payments on accounts still with original creditors to bring them current. This prevents these accounts from ending up with debt collectors. Talk with the creditors if you cannot pay the past-due amounts in full. Ask if the creditors have special programs allowing you to catch up over time with smaller payments. Provide creditors with any documentation they need to consider you for special hardship programs.

3

Settle debts with debt collectors for less than the full balance. Usually, it's not possible to restore accounts with debt collectors to good standing. In most instances, the debt collector has closed the account and listed it as a charge-off on credit reports. At this point, settling the debt for say, 20 percent to 70 percent of the balance is the best option for resolving the delinquencies. Paying the debt in full isn't going to erase the damage already done to your credit report, so you should negotiate with the debt collector to pay as little as possible. Address debt with collectors only after you have other active accounts back in good standing.

4

Meet with a consumer affairs attorney if some debt collectors or creditors have initiated lawsuits against you. Debt lawsuits are serious, but a good attorney can file various motions to stall suits for months or even longer. This gives you time to save for a settlement.