Expert: Ontrack Financial Group llc - 12/29/2008

Question
Hi,

Ok, my problem is as follows. I've run up 3,000 UK pounds of debt via my credit-card due to a period of depression. I've been told by my brother(who works in the financial sector) that I should NOT pay back the debt but to wait for c.6-9 months until both the credit-card company and the subsequent debt-collection agencies give up calling me on the phone  and ask me to pay a settlement. My brother says that since I'm long-term unemployed that they will be forced to accept a much lower sum in payment to wipe out the debt(say, c.20% of the actual cost). I'm not so sure of this as I've vaguely heard of others in the media racking up debts of 16,000 US dollars etc. and being forced to pay it all backwhile being unemployed, but then these weren't long-term unemployed like I am. Anyway, my brother says that all that will happen is the above 20% payment/settlement and a removal of my credit-card-facility for 5 years, along with a poor credit-rating.

What is your advice on this issue?

Thanks,Geoff

Answer
Dear Geoff,

Thank you for your question.  

Our advice is that your brother is wrong on many fronts.  

1. Debt collectors won't give up on you for years, not months.  
2. Debt collectors/creditors are not offering as many settlements as they have in the past, in fact both parties have turned to the courts in their aggressive action.
3. Even though your long term unemployment, there are tort laws that protect the creditors.  
4.  Your brother is correct about the removal of your credit, and a poor credit rating.

We're not saying it's impossible to receive a reduced amount to resolve the accounts.  We're saying it's not as easy as you think.  

Warm Regards,  

Ontrack Financial Group llc