Legal Question in Credit and Debt Law in Texas

Credit Report

I have a debt dating back to May 1997. The original debt was about $9500.00. It has escalated to over $16,000.00 with interest charges and penalties. This is an unsecured credit card debt. We have been making payments of $50.00 per month. Obviously this is not enough to even pay monthly interest. This has been turned over to a collection agency. Periodically, they call us and try to make us refinance our home and pay a settlement to them. We do not want to refinance and jepordize our home by taking money out of our equity to settle with them. We want to pay the debt but at this point we don't have the extra money to make payments of over $350.00 per month or to settle. If we continue paying $50.00 per month, how long will this delinquency remain on our credit record? Will a settlement work adverse on our credit record, and if so how?

Thank You,

Esther


Asked on 6/28/03, 11:37 pm

1 Answer from Attorneys
Sharon Campbell Sharon K. Campbell

Re: Credit Report

The debt may stay on your credit report for seven years from the date of last activity. The best bet is to negotiate for a lump sum payment settlement. Often creditors will take a reduction in the total amount due if they are getting a lump sum. If you can't do that, I would make as large payments as possible to reduce the interest and principal. If you negotiate a settlement with them you can also negotiate how it is reported on your credit report. If you reach an agreement, be sure that it is in writing. The creditor cannot force you to take out any kind of loan but as long as the debt is delinquent it will be reported as such. You might want to reconsider the home equity option. Mortgage interest rates are so low and credit card interest is so high, you could come out way ahead. That would be a way to pay the debt in full, cut off the high interest and it would be alot easier to pay off the debt at the low mortgage interest rate.

Read more
Answered on 6/29/03, 5:17 pm


Related Questions & Answers

More Credit, Debt and Collections Law questions and answers in Texas