Credit Collection Question

iVillage Member
Registered: 12-21-2004
Credit Collection Question
3
Sun, 11-06-2005 - 10:24am
Here I go again...I know that the ones of you that read several of the boards get tired of hearing my story...but other than the boards I have nobody to talk to and at times I think I am going insane. I was able to file Chapter 7 Bk in October under the old rules - my husband was not allowed to file with me because of a loan he had taken out within the past 90 days. (I know alot of you don't believe in BK but neither did I - but with a husband that was out of work at least 1/3 of of the year and mounting credit cards bills (just to live on) and medical bills ... anyway it is done now ...but husband has a job now - but we are so far behind on everything...he only had 3 credit cards in his name and all three showed up on the credit report we got yesterday as charged off accounts. I realize that now they will probably be bought by a collection agency ( I guess maybe they already have because we have gotten two letters). I read somewhere that charge off looks worse on a record than BK...will interest continuing adding to the amounts, what about late fees, and overlimit fees? If we ever get any money will we have to work with the collection agency? Right now we are just trying to pay the light bill (which was paid for us by family the last 3 months), buy groceries, and gas. I know that none of these are very desirable things to have happen to us...I just can't believe how ugly people on ohter boards (not ivillage) can be. We are going to try and sit down this afternoon and look at what we owe (not including the credit cards that have been turned over or any of the things that I owe that is in BK) and see how we can make some sort of plan to at least get utilities and the drug store caught up. I have been so worried that the hospital could refuse to see us if we had routine tests to be done since I have had to file on them - but my lawyer has assured me that this is against the law. Of course I guess that doesn't mean that they have to be nice -- this is adding to my stress also. Anyway I guess I should worry about the things that are happening right this minute and not the things that "may" happen. Any words of encouragement? I am very, very thankful that my husband has a job and I pray that he will be able to keep it.
iVillage Member
Registered: 09-25-2003
Sun, 11-06-2005 - 4:30pm

I'm sorry, it sounds like things are tough for you right now.

I don't think you should worry about your credit scores right now. First and foremost, you need to eat and have a place to sleep. Take care of yourself first.

You'll feel lots better once you make a plan. I know I feel much more in control when I know how I'm going to deal with things. And, once you have a plan in place, things can improve. For some things, there might be nothing you can do about them. You might not be able to pay down on somethings for quite a while. But it'll be okay...you're not the first person this has happened to, nor are you the last person to whom this will happen.
I'm sorry I can't offer actually helpful advice. I really don't knwo much about this stuff, which is why I'm on this board.

iVillage Member
Registered: 03-27-2003
Sun, 11-06-2005 - 7:24pm

Hi Gal Jasper,

Welcome to the board! I'm sorry to hear things are so hard for you right now. It must be really frustrating to still be having trouble after your bk filing.

About charge-offs. My understanding is that they do *not* in fact look worse on your credit report than a bk. A bk means that you did not pay back any of your loans; a charge-off means that you just did not pay back that one loan.

Basically, a charge-off means that the lender has decided that they are not going to be able to collect on that debt--they've written it off. It does not, as you are already aware, mean that they won't come after you again if they think they can get you to pay. It also does not necessarily mean that they will sell to a collection agency. My dh had a charge-off for months that was never sold, though another account with the same bank was sold to collections. I'm not sure how they decide what to send to collections and what not, but the charge-off was actually for a much larger amount than the collections item, which was only $60 (dh and his poor record-keeping! LOL).

One good thing--usually a charge-off means that the lender has stopped charging interest, late fees, etc. They *might* keep charging those things, but it's unlikely. You can also pay off a charge-off, and while it will still show on your record, it won't look nearly as bad as one that hasn't been paid. Basically, you just call the lender, tell them you want to pay the loan, and they'll put you through to the right department and discuss a payment plan with you. If you're lucky, like we are, they'll work with you and you can basically set the terms. But it's possible they might be nasty, too.

A word of caution before you contact them: one possible reason they've charged off the account is they may not know how to contact you. Once you contact them again, it may start collection calls. Additionally, once you make a payment, it will re-start the calendar on your credit report, so if you aren't able to work something out with them, they can continue to report the account to the credit bureaus and if you're ever not able to pay again, it will show up as a fresh negative--and more recent negatives count more than older ones.

On the other hand, if you can handle the payments, it's probably better to go ahead and clear it up. You'll feel better for it, and it will look better on your credit report. But don't contact them until you have a clear plan in your head and the money to back it up, because you don't want to start the collection calls!

In the meantime, I think you're smart to look at getting your basic necessities caught back up first. The credit cards can wait. Kudos for sitting down to make a plan. That's often the hardest part, because it's so scary (I tend to procrastinate when I know it's going to be ugly!).

I'm sorry you're going through this right now. It's frustrating to be in that situation. I hope things look up for you soon. Post again when you have your plan in hand, and let us know what you're going to do. Maybe we can even offer pointers (if you want them, that is).

Blessings,

Heather

iVillage Member
Registered: 03-27-2003
Tue, 11-08-2005 - 1:25pm
No one addressed the hospital situation, but wanted to share that I wouldn't worry about being turned away. When I had my DS, the insurance company didn't pay for 18 months! It got sent to collections (no one from hospital contacted me about prob with ins co until my son was 9 months old!) and I had a ton of phone calls to make on this, on top of trying to pay my co-payment. Anyway, one day while talking to the finance dept at the hospital I said I was afraid that if I were to be admitted for any emergency or whatever they'd send me away, and she said that the hospital will never turn anyone away due to financial reasons. It made me feel a lot better!!

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