What Should I Do if I Can't Afford to Pay My Creditors?

Full question:

I AM A RETIRED NURSE WHO HAD TO RETIRE BECAUSE OF A DISABILITY I LIVE IN A SMALL RURAL TOWN AND WE HAVE A POST OFFICE WITH MAIL ONLY DELIVERED TO POST OFFICE BOXES IN THE CITY LIMITS I RECEIVED A NOTICE IN MY MAIL BOX THAT I HAD A REGISTERED LETTER TO PICK UP I WENT TO THE SEARCH ON THE INTERNET TO FIND OUT WHAT A REGISTERED LETTER MIGHT BE THE INFORMATION FROM THE POSTAL SERVICE WAS A VALUABLE OR IRREPLACEABLE ITEM WITH THE MOST SECURITY FROM THE POINT OF ISSUE TO THE POINT OF DELIVERY AND CAN BE INSURED UP TO TWENTY FIVE THOUSAND DOLLARS IT WAS FROM A LAW FIRM TRYING TO COLLECT ON A CREDIT CARD THAT I HAD ALREADY TOLD THE CREDIT CARD COMPANY THAT I DID NOT HAVE THE MONEY TO PAY FOR THE CARD I LIVE IN MY DAUGHTERS RENT HOUSE SHE ONLY CHARGES ME FOR THE TAXES ON THE PROPERTY SEVEN HUNDRED AND FIFTY DOLLARS PER YEAR AND THE INSURANCE ON THE PROPERTY WHICH IS FIVE HUNDRED DOLLARS PER YEAR I DO HAVE TO PAY FOR THE ELECTRIC WATER SEWER GARBAGE AND GAS AND MY PHONE LINE THAT TOTAL IS AROUND THREE HUNDRED DOLLARS EVERY MONTH I PAY THE INSURANCE AND TAXES TO HER AT ONE HUNDRED AND FIVE DOLLARS PER MONTH I AM A HEART PATIENT AND MY MEDICINE RUNS AROUND ONE HUNDRED AND FIFTY DOLLARS PER MONTH MY GROCERIES AND HOUSEHOLD ITEMS RUN AROUND TWO HUNDRED AND FIFTY PER MONTH NOW THE TOTAL IS OVER EIGHT HUNDRED PER MONTH IF I WATCH EVERYTHING VERY CLOSE NURSES DON'T HAVE RETIREMENT SO ALL I HAVE IS EIGHT HUNDRED AND FORTY TWO DOLLARS ONCE A MONTH FROM SOCIAL SECURITY I HAVE NO OTHER BILLS SO THE BEST I COULD PAY WOULD BE ABOUT FORTY DOLLARS PER MONTH I OWE THEM OVER FOUR THOUSAND PLUS INTEREST AND IF WE GO TO TRAIL COURT COST AND WHO KNOW WHAT ELSE PLEASE ADVISE THE BEST WAY TO TAKE CARE OF THIS I KNOW I OWE THE DEBT BUT I REALLY CANT PAY THEM NOR DO I OWN ANYTHING OTHER THAN MY CLOTHES AND PERSONAL EFFECTS.

• Category: Debts and Credit
• Date: 04/07/2025
• State: Texas

Answer:

If you have no assets or income other than disability payments, you may be judgment proof, meaning unable to collect payment from. Bankruptcy filing may be unproductive when a person is judgment proof. Prior to making a decision to file bankruptcy, each individual should first attempt to contact his or her creditors and determine whether it is possible to obtain their cooperation in working out a different payment schedule. Most people would be surprised to learn that creditors often are willing to make reasonable modifications to assist the debtor in repayment. Communication and honesty are the key words here. In exploring this option, the creditor should be honest and forthright with the creditor regarding one's financial situation. The automatic stay is one of the most valuable functions of a bankruptcy proceeding for the debtor seeking relief from creditors. The automatic stay immediately stops any lawsuit filed against you and virtually all actions against your property by a creditor, collection agency or government entity and provides an injunction against the continuance of any action by any creditor against the debtor or the debtor's property. After filing for bankruptcy, the automatic stay will prevent creditors from calling and harassing the debtor in any way. In fact, should a creditor continue to attempt to contact the debtor during the automatic stay, that creditor could be held liable for damages.

I suggest attempting to settle the debt before they obtain a court judgment. Hospitals often have credit counselors available who can work with you on reducing the bill or working out a payment plan. Once a judgment is obtained, the creditor will likely be unwilling to negotiate a settlement and may place liens on property, such as bank accounts, or garnish wages. In some cases, a debtor may be able to negotiate a settlement with the creditor, although this is more difficult once a suit has been filed. In some cases, the creditor may settle for a lesser amount if the debtor is insolvent, since a promise to pay something is better than collecting nothing. These types of agreements are called an accord and satisfaction. If it is possible, a debtor should get a release included in such an agreement so that the creditor may not pursue the full balance of the debt claimed.

You have probably heard of debt relief companies. There are also some companies, even credit card companies, that will work out a compromise settlement or reduced monthly payment. Family and friends are also sometimes options. There is really no good answer to your problem, a problem that many people face. Thus options include, but are not limited to, bankruptcy, debt relief company, compromise you do yourself, friends, family, loans. I suggest you resolve the charges before a lawsuit is filed to collect the money owed, which may further damage your credit history.

Another option to examine is Consumer Credit Counseling Service. CCC is a nationwide nonprofit organization that attempts to work with both the debtor and his or her creditors to devise a more manageable repayment plan. This service very often results in revised payment plans which are acceptable to both the debtor and the creditor, thereby eliminating the need to file bankruptcy.

If you need help negotiating with your creditors, consider contacting a nonprofit debt counseling organization. You can find a list of counseling agencies by location at the website of the U.S. Trustee, www.usdoj.gov/ust (select "Credit Counseling and Debtor Education.") The federal government has authorized the agencies on this list to provide counseling to debtors considering bankruptcy. However, don't pay anyone to "fix" your credit.

The following link allows you to search by area for financial counselors recomended by Dave Ramsey:

http://www.daveramsey.com/coaching/find-coach/

Please read the tips from the Better Business Bureau on selecting a credit counselor :

http://www.bbb.org/alerts/article.asp?ID=613

The following organization is a referral from the Better Business Bureau:

http://www.clearpointcreditcounselingsolutions.org/?source=bbb_tip_choose