Monday, October 15, 2012

That old debt - yuck

So, I looked through the paperwork I got from the lawyer's office. There was about $1200 in medical debt from 2008 from when I tore my ACL. In the Spring of 2008 I was treading water, but flailing in debt. I'd spent over two years dealing with all the expenses that had piled up since 2005 and I thought I had things under control as of the beginning of the year.

By summer of 2008 I had bills coming out of my ears and everyone had decided simultaneously that they were no longer going to except small payments from me, but instead needed me to settle out 100% of my debt with every company. In 2008, that totalled over $45,000. (I had paid down $5,000 worth of debt between 2005 and 2008). But it was all due NOW.

I got scammed by one of the debt consolidation gimmicks. Who told me to stop all payments and pay only them x amount - then they would start negotiating settlements on my behalf.  The idea being that by stopping payments, the companies would be more willing to negotiate and by paying them the difference - that would give me a chance to save up enough money to make it interesting for the other companies to settle. About two payments in, I started getting garnished - which meant I couldn't make the payments to the settlement company. I never saw the money back either.

By Fall 2008 I was convinced I was going to have to file bankruptcy. The collection calls were constant. I didn't have the money to make anything but mediocre payments. My debts had been bought and sold so many times I couldn't keep track of whom to make the next payment to. I'd get calls from companies and wouldn't know what debt they were calling about. It was bad.

I talked to the lawyer and we started the process for bankruptcy. This would have been right around the time that the debt for the spring 2008 surgery probably would have gone to collections for non-payment. I couldn't find any record of it at all in the documentation I prepared for the bankruptcy process. And of course, one of the benefits of starting the process is that collections can't breathe down your throat while you're doing it. So, they couldn't send me a statement of the amount owed.

When things started to take a turn for the better during Spring 2009 and I finally could start making a dent in the mess I'd gotten myself into... I ended up not filing for bankruptcy. But instead I took the debt list that I had prepared and used a work bonus and tax refund (which was a GOOD tax refund) and used it to start knocking off debts. I got enough folks off of my back that I could start making payments... I worked on the little debts. Between the garnishments, getting rid of the smaller creditors, etc. I got to the point where I had less than $10,000 in debt by Spring 2010. We went to Disneyland to celebrate.

By Summer 2011, the only debt I thought I had left was just my car payments... which has since been paid off, died, replaced by another car and more car payments.

But now, out of the ashes of my former financial fiasco rises this 'oh, but what about us' debt. sigh.

I am going in with a plan this time, though. I have $800 in checking before my last payday. That's more than 50% of the debt total. I'm going in there and offering them $540 (45% of the debt) and asking them to write off the balance. If they counter offer higher (which I would expect) I'll go up as high as $720 - 60% of the debt. Though I'm hoping since they've never seen a single payment in 4 years, that they'll settle at closer to 50%.

Sooner or later I have to dig back through my credit score again and make sure there aren't any more of these hidden gems. I was going to wait another year or two because that would be around the right time to start contacting companies to get them to remove out-dated information from the credit report and I could start cleaning it up. But I don't want any more nasty surprises.

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