celest 2013

[Sarah]

Had a loan which was given to me 3 years ago when I was working. The loan was for $7,000. I was using it to help me pay down some of my other debt.

I became ill and was declared disable. I was no longer in a position to pay down any debt. I did manage to pay $2,000 of the loan. It is not currently being reported as that. The full amount + is being reported on my credit reports. I would like to know:

Although I am only getting SSD how I can handle this matter. I just started trying to rebuild my credit and have been working with a Law Firm. I don’t know what to do.

[John]

Talk to your lender!

If you have problems paying down a debt your first action should always be to talk to your lender and try to come up with a solution. Explain your situation and see if they’re willing to delay payments for a while or refinance the loan to allow for lower monthly payments.

Ignoring the issue and simply stopping payments will only make things worse. If you stop payments for 6 month w/o first coming to an agreement with your lender most chances they’ll write you off and sell the debt to a collection company. As if the late payments aren’t bad enough, a charge-off if one of the worst things that can happen to your credit report. They’ll probably file a lawsuit against you, which will only worsen things.

As much as I sympathize with your situation, it has nothing to do with your liability to pay down your debts. Your lender may be willing to delay payments or reduce them, but in the end you will need to pay back your debt in full. Your only other option is bankruptcy, and as far as credit reports and scores go – you don’t want to get there.

Unfortunately, credit reports and scores do not take into account why you’ve stopped paying back your debts, so don’t expect any sympathy there either.

If you have any money set aside as an emergency fund – it would be a good idea to use it to pay down that debt.

All the best

[Author]

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