Pay Something, Anything
I, too, was once drowning in debt. The important thing to remember right now is that agreements mean nothing. Your actions will speak louder than words. The first thing to do is figure out how much you can afford to pay regularly. (I find that budgeting for every two weeks, with the pay cheque, is easiest for me.)
I divvy up the payment to match the debt. For example, if student loans are 50% of my debt, 50% of my payment goes towards them. My minimum was $5. I'd always send at least that much. Then write the cheque and send the payment, even if they say they won't accept it. I've never had a cheque returned. Better yet, pay it online. The important thing is to pay them something, even if it's $5. This way, even if they do go to court, you can show, by your actions, that you are committed to repaying the debt. Any judge will see that and cut you some slack. The agencies know this; they are very likely to let you slide until you've paid off some of the smaller amounts and can increase your payment to them. They may not bother with the lawsuit if you've made it less likely for them to win by your payments. Once you've made a few payments on a regular basis, the tone of the collectors will change. They know you're committed, and not just another person promising something they never follow through on.
When you pay something, anything, regularly you will make progress. Don't give up and don't miss payments. Missing payments destroys your credibility. Keep going and you will get out from under the debt.
Elizabeth J. in Toronto, Ontario
You Need an Advocate
Get a lawyer. Not necessarily one that promises to settle for pennies on the dollar, but someone that can negotiate for you and help you come to an agreement with your various creditors. At this point, it sounds like you need an advocate. If the cost is too much, check with local community agencies for free or low-cost legal help. And of course, figure out what you can do to raise the scratch to make the monthly payments.
Don't Give Up
First, make sure you have a written budget. As the old saying goes, people don't plan to fail, they fail to plan. Prioritize the debt. Of course, the IRS should be first after rent/mortgage, lights and food. The student loan collection agency might not have agreed to the $50/month, but I doubt they would return any amount you send. Don't forget about "found money." Have a yard sale, put larger items on eBay, etc. Or take an extra part-time job. Deliver newspapers or pizza for a few months. Just don't give up!
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