Posts Tagged ‘“payoff debts”’

Tips to a Former Small Business Owner, Now Trying to Settle Remaining Debts

Friday, December 30th, 2011

I had a small construction business that went under a couple of years ago when housing took a nose dive.  Some business debts remain and I am getting calls from a manager of one of my suppliers, who wants me to settle up on a $2500 account, but I have nothing to pay them. They are now threatening to sue me for the debt.  Any suggestions? Should I call the manager?

My response:
If you can borrow the funds from family and friends to settle the entire debt for less than the full balance due, then that is a good reason to negotiate with the manager.  I would not propose that you simply borrow the full amount from your friends and family, so that you would owe the same amount of debt to them. When your pockets are empty, that is the time to negotiate with your creditors to settle for much less than the full amount, such that you reduce your debts to something that you can pay off quickly to your friends, when things turn around for you.

In settling any debts, be sure that you have written confirmation that the amount you are paying will settle the full balance.  It is not unusual for a debtor to believe that they have negotiated a very good settlement, then learn later that the money paid was applied merely as a credit towards the balance, and the creditor still demands payment on the rest (or files a debt collection lawsuit) or has assigned the unpaid balance to a debt collection agency.

I have posted on three legal guides on how to negotiate a debt, including specific information on the documentation that should be prepared to ensure that the debt is considered fully satisfied by both sides.  Link to Avvo.

Robert Stempler

Six things you can do better than a credit repair company

Friday, June 4th, 2010

The Fair Credit Reporting Act was written by Congress to empower individual consumers to dispute incorrect items on their personal credit reports.  From what I have seen, consumers are more likely to correct credit errors  than a credit repair mill.  Here are some easy steps that you can do to improve your credit.

1.  Know what’s in your reports.   If you don’t know what is in your credit reports, please order it right now, without any hesitation.  If the consumer orders his or her credit report directly from a credit reporting agency (“CRAs”) (such as Equifax, Trans Union, or Experian), it has NO affect on your credit scores. Only when you apply for credit or have a friend run your credit at a mortgage company, real estate broker, or car dealership (for instance) does this lower your credit score because this shows up as a use of credit, as though you were trying to buy a car or house.

2.  Dispute errors by Certified Mail.  If you find any errors in your credit report, send one of the sample letters from my web site ( to the credit reporting agency to dispute those errors and provide written documentation to prove your are correct. Many credit repair agencies don’t bother with providing documentation.

3.  Dispute errors by phone.  If the credit reporting agency refuses to correct the error on your credit report, call them on their toll free number. The CRAs must receive disputes by phone or mail.  You may have better success if you call and speak to a representative in the consumer relations department about the specific error and they may even have access to the documents and dispute letter that you sent before, when you call.  Credit repair agencies usually will not call and many CRAs will not talk to anyone but the consumer.

4.  Consult an experienced lawyer.  If a debt collector or creditor refuses to correct an error on your credit report, review this with a lawyer who knows about the Fair Credit Reporting Act and can explain the next step, if litigation would be advised or if another dispute should be sent.

5.  Pay off debts with the money you save.  Credit repair is very expensive,  hundreds or thousands of dollars.   The money you save on credit repair is better spent paying down account balances, which will improve your credit scores, in addition to making all monthly payments on time.

6.  Review the free legal guide that I wrote on entitled “DIY Credit Repair.”