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oh money money - who's got the money


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Ok so I could swear I saw a financial section in here, but it's not an option when posting so - I'm just going to put it right here.

 

I'm 27 years old and after years of drug addiction and otherwise poor financial decisions I'm tyring to get my financial life in order, improve my credit score (which, depending on the credit reporting agency you check with, rates as low as the high 400s ((i know, horrible))).

 

I wasn't brought up in a fiscally smart household, barely even knowing what a credit score was until I moved from Smallsville, USA to the city in my early twenties. That being said, it's safe to say I'm pretty new to the ins and outs of the system and I'm trying to put something of a decent financial life together - the only problem is... I don't really know how to go about improving my credit score. I understand that past due debts will need to be taken care of, and I have no issues dealing with that... but my (maybe unreasonable) fear is that once I contact one debt collector to pay off the first bill in the list of many, the other collections agencies will start hounding me, demanding money that I can't pay because I'm trying to pay off the other older debts first. This makes me worry about suit for garnishment which would completely destroy any attempt to reconcile my finances.

 

What should I do? I've thought about bankruptcy, but that just seems so sinister and frightening... people talk about it like it's the plague - but at the same time, if I try to pay all these things off it will seriously hinder me from staying current on the bills I have right now (car payments, rent, insurance, etc...) Ugh... I'm just so frustrated. Any advice would be GREATLY appreciated.

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Well I can tell you right now the whole credit and repairing/fixing can take pages of explanation.

 

One thing you never want to do is wake a sleeping lion. If your debt is past the SOL (depends on each state), they cannot collect from you legally. So one thing you can find out is how old each debt is. I would only worry about accounts that are relatively new and especially if there's a high dollar amount as they may take you to court.

 

Don't be afraid of the collection agency, they have so many laws to follow like the FCRA, FDCPA, etc, you just need to know your rights and what you can do to pay down the debt. They do break the law often as they don't expect consumers to know the law.

 

One great resource you may want to check out is link removed You'll find enough information to keep you busy for a long time.

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I think you need to put together a budget listing all of your obligations. List everything that you must continue to pay monthly (rent, utilities, etc). Then you'll see how much you have left over. That is what you have to work with to pay your installment loans including your car.

 

With a credit score in the 400s a judgment or collection lawsuit will not make it any worse. It is already terrible. Frankly if you need to declare bankruptcy your credit score might even increase from the 400s.

 

Once you have your budget figured out and you know what you can afford to pay, start calling your creditors and try to work out a repayment plan that fits your budget. If you can work something out then great. If you can't, then you will probably have to go with bankruptcy.

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