I am in debt about $3000 from 2 credit cards, and $500 from other debt like phone bill.
1st credit card $2000, haven't made any payments for 2 years.
2nd credit card $1000, haven't made any payments for 6 months.
$500 collections from electric, phone, cell phone bills.
I have about $5000 allocated to fix my credit.
How should I start this?
The first thing you should do is "stay off the phone to collectors and creditors".
Second, start reading the FAQ.
Third, have patience and wait on those with more experience to answer your questions and give you advice.
Forth, hold on to that money until you have a plan
You may be able to settle those debts for considerably less than the original amount. You should also be aware that collection companies may sometimes add on "extra" charges simply to pad their profilt margin.
My suggestion would be to communicate only in writing, and offer a settlement amount that you think is fair. Don't start too high, and give yourself some room to negotiate. Also try to get them to remove the debt from your credit report. You may run into some resistance to this, but if they want your money bad enough, they may be willing to oblige.
As a side note, there might be tax consequences involved with settling debts. I'm NOT a tax professional, therefore, I suggest you consult with one before settling anything.
Do you have a hard copy of your credit reports? You will need those before you do anything.
You need to compare the information on these tradelines that are in the credit reports with your information. Compare all information you have with what is being reported. Look for information in your credit reports that is incorrect.
Look at the personal information, ie address's and such. Make sure that all of that is correct. If you find your personal information is wrong, tackle that first.
Before you start handing out money.......you should DV any collection agencies and Verify with orginal creditors.
If your not careful, you could spend your $5,000 and still not get clean credit. It's importand that you take your time, read the board and formulate a plan.
