I accumulated a lot of debt in my 20s. Avoiding calls from the bill collectors became a constant worry, but I knew that I brought it on myself. I could relate to Rebecca Bloomwood, the character in "Confessions of a Shopaholic," who went to great lengths to evade the sleazy bill collector, Derek Smeath. However, once I finally took the time to talk to a bill collector, I felt great. Finally taking responsibility for my credit card debt gave me a feeling of empowerment. I didn't want to declare bankruptcy or walk away from my responsibilities. I just needed a little direction and push to get me started.
I recently read an article posted on The Observer in Kingwood that referred to a new study showing debt collectors have a positive impact on the economy. According to the study by the ACA International and Ernst and Young, third-party collection agencies recover assets, create jobs, pay taxes and give back. For me, talking to a bill collector helped me ultimately become free of debt for good.
Taking the first step
The first step for me was to simply answer the persistent phone calls. The bill collector, who was actually quite pleasant, helped me by explaining how I could settle my credit card debt. He helped me figure out how much I could afford to pay upfront and in monthly installments. I no longer had to worry about the late fees and accumulating interest charges.
Improving my credit score
Although the bill collector didn't promise me an improved credit score, I found my credit score quickly became to improve after I committed to paying off my debt. I lowered the amount of debt that I owed without taking on any new debt. I didn't put my credit cards on ice like the character, Rebecca Bloomwood, but I did put them in a drawer.
Creating good credit habits
After speaking with the bill collector, I felt a huge sense of relief. It was a lot easier to confront my spending problem than to keep running away. I turned things around by paying my bills on time. I stopped transferring credit card balances from one card to another.
Avoiding credit report double jeopardy
By talking to a bill collector right away, I may have avoided what some experts call "credit report double jeopardy." Collection accounts may be sold from one collection agency to another. Even though I could dispute the duplicate collection accounts, it was easier for me to simply talk to the first bill collector before it went any further.
Bargaining with the bill collector
Although I'm not great at bartering and bargaining, I liked the fact that I could bargain with the bill collector. Settling the balance for less than the full amount still gave me a great sense of satisfaction. At that point, I was still paying what I owed. I just wasn't being held responsible for all the extra late fees and compounded interest charges.
After settling my debt, I was able to focus on other financial goals. Within about 3 years of getting out of debt, I bought my first home. I look back on the day that I answered the bill collector's call as the day that got me going on the right financial path.
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