I received an email looking for financial advice for a young worker living paycheck-to-paycheck, who recently discovered the existence of an old debt thanks to the collectors who came calling. I wrote back suggesting negotiation with the debt collectors by showing the amount could be paid back over a period of time, but perhaps readers can offer some additional suggestions. Here is the full story:
Katie is a 23 year old living in Utah. She works a full time job, pays rent on an apartment, and has a car payment. She has about $6,000 in debt that she has been managing over the past couple of years. However, this week she received a letter regarding a credit card she forgot she had while in college in Georgia. I guess the debt collection agencies had been sending her notices to her old dorm address, and finally hunted her down. She now owes an additional $3,300 on this credit card in 2 weeks or she goes to court. Going to court means losing her car and having her credit ruined.
Katie is considering one of those loan places that charge a huge amount of interest. I know this is a cringe-worthy solution and I am wondering if you are aware of any legitimate loan places or programs that could help her overcome this $3,300 debt and help her begin paying off the other $6,000.
She’s pretty much month-to-month on the paychecks. Her family situation is such that she is uncomfortable asking them for money.
I’m at a loss, but I REALLY don’t want to see her go to one of those skeezeball loan places. Any thoughts at all would be extremely appreciated, and thanks so much for reading.