Ok, so we have hit rock bottom. The in house collection department has written off our accounts as noncollectable. So what happens next? They sell their bad debt (your account) for pennies on the dollar. You are probably saying to yourself why in the heck would they do that??>!!??  Collection agencies know they can hound good people enough that those people would eventually give them some of the money back. The moon will be promised by these collection individuals with not having to fulfilling any of the promises. Most companies want to get you on a “payment plan”. Lets think about this payment plan. Say you buy something for a dollar that you think is worth 50 dollars. Now lets say you find someone willing to give 10 dollars every two weeks but you charge a fee or interest for this type of payment plan. Now get a few hundred of these payment plans together. Now you have now help build a monthly income for a collection agent. See why they continue to buy cheap paper and create more monthly “payment plans”  Check out part 6 to see what options you have.

Ok, now we are the default part. The in-house collection agency have your accounts now. Your are basically close to the dead zone aka paper sold to a collection agency aka charge off to your credit. You might just have some 60 to 90 day late payments. You can still clear these accounts with full payment or can negotiate for a partial payment. Now don’t get fooled by the partial payment. If the in house collector tells you to make that partial payment that all will be done is just plain foolish. They will take the money and continue to hound you until they get the rest of the portion or they will write off the rest and sell your account to a collection agency. So the correct way is to get a piece of paper from the in house collector that states your account is paid in full and this account is closed and all requirements of this account have been satisfied with no penalties. That way you can send copies of this information to the reporting credit agencies. This process goes for the people that pay the full portion if you do not want to negotiate a partial pay off. Check for part 5 if you have a charge off or your account is sold to a collection agency.

So how does a creditor work? Believe it not the people you owe money to are the ones that report you when you default. A lot of companies and civil service places have their own credit department. These are the people that initiate the phone calls and mail you that you owe money. These items usually don’t come until after 30 days of the bills due date. Most of these people are quite pleasant and understanding of your plight. However, they will still ask for their money. Here you can initiate a payment plan or chunk payment of the bill to keep them from reporting you to the credit service for default or “30″ day you. Which is kind of like saying you are a slow payer at the point of time. However, most of you are looking to fix your credit past at this point. Check back to part 4 to see what happens after this part.

Now, I am assuming that you have done your homework. We are going to talk about the most important part of how to fix your own credit. Admittance. It is just that plain and simple. Fixing your credit takes dedication and time. Let me repeat that.. dedication and time. If you do not recognize you have a problem, then you are just as bad as a denying addict addicted to something. Sit down with your family and let them know as a family you are going to set goals for yourself. While setting these goals you will teach the children what to do so that they realize how important it is to maintain your credit. Your children are going to witness you become strong and tackle this credit problem. Explain how hard the process is and how they need credit for just a home or an automobile. No television, cds, dvd, or dvd players should be bought with credit. Show them how 5 payments of  a minimum of 40.00 equates to 200.00 which will buy them the player that they wanted. Also explaining minimum payments are just interest not principal. Your next assignment is to calculate all the money that you owe. This includes even if the accounts have been charged off. Back taxes count also.  Next posting will work on how to read what a creditor reads and how to talk to them.

Hi all,

I am going to break down how to fix your credit into sections.  Anyway, I believe before trying to attempt something you should have a plan. So let’s take an outside look at what got you or us into a situation. Corporate America as you have seen the last year is very financially based.  Everything is falling apart because we have overspent beyond our means on a national level and on a personal level. Teenagers are being introduced to credit without having gainful employeement.  These teenagers grow up to become adults who already earning a wage that cannot pay their debt. This is just an example but an example I want to start with. I feel you should tell your kids that you are going to right your previous wrongs as you are restablishing your credit. You are serving two purposes here: you are commiting your first step to admitting you are serious about cleaning up your credit. Secondly, at most importantly, you are teaching your children not to jump right into a credit based life. Your children are going to see you struggle yet at the same time they will see you become victorious in end. So lets start with our plan to right the ship! 1. Who do we owe all our money too? 2. Is creditors ringing our phone off the wall? 3. What is the reason that I want to restablish my credit?   So that is your homework assignment. I will drop a hint here…  www.equifax.com  www.experian.com www.transunion.com  are the big three that hold your credit ratings.  So go to each site and get your free credit report printed up. You will need it for the next section.