I have more than $3000 in credit card debt.

Question

And I've been thinking of just letting it go to collections so I can pay it down without all the interest. Do you think that can work?

Answer 1

That will be very bad mistake and will remain on your credit file for 7  years. You can get another job and pay the credit card bills. Get a loan from friends and family and pay it off. Your expenses are higher than your income that is why you cannot pay your bills. Make a budget and cut down expenses.

Answer 2

What makes you think the interest is going to go away? Interest, late fees, and legal fees will continue to accumulate and trash your credit score, and next thing you know you will have a $6000 judgment against you and they may garnish your wages.

$3000 is a relatively small amount now, but if you let it fester, it will multiply and you will pay more for any other credit for years to come.

Haven't you noticed all of the silly questions daily asking "Where can I get a loan with bad credit?"

Answer 3

Letting your debt go to a collections agency is never a good idea.  As I'm sure you already know, a debt in collections will ruin your credit for the next 7 years.

Collections agencies add on a crazy amount of fees too, and it's really not worth it.

Keep your eye out for promotional balance transfer offers.  At one point, I transfered $2000 from my 22% APR Capital One Card over to a CitiCard with a promotional APR of 2.9%.  It's saving me a LOT of money in interest, and it's helping rather than hurting my credit.

Answer 4

Doing that will hurt your score a quite a bit. Also, it won't go straight into collections. The CC Company will hold the account for as long as their policy has them do so, easily up to a year.



Why? So they can charge you late fees, interest, and overlimit fees. Your bill will increase exponentially before it gets to collections. A 500 dollar balance will become a 2500 dollar balance before it gets to collections. This is the nature of the beast; A collections account is an account that has been sold by one company, to another. So, the credit card company will sell the right to collect 2500 bucks from you for between 200 and 800 dollars. They will generally try to break even on it, either way. The company that buys it will then CONTINUE to charge you interest on it at a lower, but still painful rate. They will be more willing to settle the debt for less than what is owed, but it won't be by much.

If you are having trouble keeping your head above water, try a credit counseling service. Only do this if you are having trouble paying your minimums though, as this will hurt your credit score a bit.

But turning your back on debt is one of the most destructive things you can do to your credit. And to do it in the name of saving money is a bit crazy, when you consider that ALL of your interest rates for the next 7 years will be much higher.

Answer 5

no the collection people will take all your good stuff and price it low. Your better off paying it off. Trust me its happened to me

Answer 6

maybe

Answer 7

First off go to your bank, get a personal loan, which will be a cheaper interest rate than your credit card, pay off the debt on your card and pay back the money on your personal loan at the cheaper interest rate, and then most importantly, chop up your credit card and do not use one again. until you can be more responsible with one.

Answer 8

Before you start thinking that way and getting your credit destroyed (possibly getting wages garnished), you might want to consider the help of a legitimate consumer credit counseling service or even getting a repayment plan of your own. Collections is not a fun or wise option for financial trouble. It's important to reduce your current expenses and/or increase your income to repay what you owe. Now that you know how easy it is to get into debt and how hard it is to repay, stay away from future credit except for home, auto or other goods and services that you really really need.

Answer 9

Don't ruin your for credit for the next 7 years over a measly $3000.  If you don't want to pay interest, then pay it off quickly and pay less interest.  In the future, use cash.  Then you'll never have interest again.