Thousands in CC debt, oldest starting college, need help

Hi BPN, my husband and I are not able to organize our finances. We are kind of really stupid when it comes to it... we got ourselves out of credit card debt once, but slowly got back into it. Once in a while we figure out a budget, but we don't stick to it. In a month or two, we stop even looking at it. We owe thousands in CC debt, our oldest is just starting college and we have to take out large loans for that. We have a house with equity, but can't refinance because of the CC debt. I can go on...it's pretty bleak. We both have jobs and make okay money.

I always thought that financial advisor/coach is just for people with a lot of money, helping them investing and saving. But while reading a post here recently, it dawned on me that we could benefit from a financial advisor. So my question to you experienced folks is... can a financial advisor help us look at our spendings, set a budget and make a plan to get out of debt (no investing or savings are happening at any time soon) ...how much would that (about) cost, and did you find it worth it (and how do you pay if you don't have any extra cash) ...can you recommend somebody (Berkeley, Oakland preferably). Thanks so much! financially illiterate

Recently, I've done two things to help turn our finances around. A year ago I went to a free credit counseling service and consolidated about 6 credit cards. This company (Money Management International) contacts your creditors and works to reduce the interest rate. Then you make one payment to them (along with a minimal service fee - our is about $14/month) that satisfies the minimum monthly payment and that you can afford and they pay your credit cards each month. We have paid one CC off entirely and have 5 to go, which should be done in 2 years. No more late or missed payments and you can always go online and pay your CC directly or pay into MMI directly if you have ''extra'' money.

And yet, we are still overdrawing and have recently started using and accumulating credit cards again! In other words, our habits have not changed. Tired of living this way and wanting to change, I have just enrolled in Money 4 Life financial advising which uses the Mvelopes system. As I'm just ramping up I can't give a good indication of its effectiveness but it clearly has some advantages: First, Mvelopes is an online ''envelopes'' system wherein you direct your cash/income into envelopes (like they did in the depression and like my parents did when i was growing up) and you spend from your envelopes, NOT your bank account. Sounds obvious but, if you're like us, scrambling to make all those first of the month payments, you NEED something that shows you how much money you really have (or really don't have!). Second, you can sign up for Money 4 Life financial advising which is a once a month phone call with a financial expert to TALK about your budget, your allocations, your goals, how you're doing, what you messed up, how to fix it, questions you may have (I have to go to the dentist - where do I get the money??). You can do the mvelopes system for free but the issue is changing your habits! The financial advising costs about $50/month. I sound like a salesperson for them but let me tell you I have High Hopes for this working - they are going to help me accelerate my debt payoff so that we can be debt free (except education debt) within 3 years. We are talking about $20K in debt. I have taken classes in debt reduction but what I need is an advisor to help keep on track and help change my habits! Finally Turning my Finances Around

In a horrible financial predicament, not sure what to do

I am in a horrible predicament and would like to get some advice. Background-divorced mother with full custody of 2 teenagers (one in college...not cheap....) without financial assistance of ex husband. I earn about 100K a year which sounds good but my mortgage including property taxes and insurance is $4200 or so a month. College is 2K a month. Applied for financial aid and got the bare minimum which is already used up...This leaves me with little extra. I have run up my credit card to 20K (I know- no judging please.) I have stopped using credit card but of course I am in a big jam as I cannot make minimum payments on credit card and am currently barely able to make ends meet. I tried to refinance but the bank said I was 'close but not close enough' to qualify for a lower interest rate. Now that I cannot pay my credit card bill I am now losing my credit rating. I am so upset and angry at myself for getting myself in this predicament however I am dying to right the situation and get back on my feet. Does anyone have any advice? Please- no judgement! I have done my best and even take extra jobs to make ends meet. My company pays for financial counselors but I am worried that I might get someone who does not know what they are doing? However-I do not have an extra dime right now so cannot pay anyone who you might recommend. The worst part of this is that I am so humiliated and embarrassed...I have not told anyone. However it is taking a terrible toll on me. I have one good friend that I could possibly borrow money from but that is just a band-aid and I need a real fix. thanks and it feels good to just get this off my chest. thanks bpn'ers very anon

Second, I have used the ''free'' employee services offered through my employer for all kinds of free advice and found it really helpful. I always ask where the person who's helping me is based (to avoid sharing personal information with anyone in my area, specifically because I have a somewhat public profile and wish to keep our financial stuff personal). The advisers, everyone from a financial planner to a real estate attorney to a tax attorney, provide a certain amount of advice (time based) for ''free'' and after speaking with them I felt like I had a better handle on what to do because I knew more about the options. It's kind of like knowing a bunch of smart people who you can consult with for free to get some good ideas with no obligation.

Anyway, just wanted to encourage you to get help. There are SOOOOO many people struggling right now and there is nothing to be ashamed of. also struggling

I don't think I've told any one friend about ALL those things because, well now I'm starting over but I was embarrassed and ashamed. The bankruptcy was the icing on the cake and sitting there with the document preparer felt like just rock bottom, but she told me there are so many people in the situation. There are, it's a nation-wide, world wide thing. Nolo Press even re-wrote the intro to their bankruptcy book to reassure people not to be ashamed. So don't be ashamed. I know you're not that low but still, don't. Be proud of yourself. People who are supported and who may judge have no idea how quickly they would use credit cards to pay for medical help or college or whatever for a kid if they had to.

I do think I'd find a way to get out of that mortgage though, get into a smaller place. Look into the bpn archives about short sales (if you own) and options for getting out from under that, just to get the cash flow going. It's excellent that you have work, be thankful.

Sorry no big suggestions, just a few words of encouragement. I guess I want to say, if I - the lowest of the low - can survive, you can. Don't give up. Do all you can. Listen to other people who post. And if it gets as bad as it can, which it probably won't, you will survive. Everything you're doing for your kids matters. best of luck

Here are some recommendations I would make in order of first moves to last resorts assuming you have already trimmed all discretionary expenses that you are able.

First, you need to tackle that credit card issue. The interest and credit rating repercussions are going to continue to hurt. Have you tried calling the credit card company and negotiating a plan with them? Or perhaps a legitimate debt consolidator? I had a friend whose husband got into credit card trouble and this really worked for them.

Second, and I know this is difficult as every mother wants to provide everything for their kids, but can your son take out a small college loan to help with expenses and free up a little monthly cash for you? Nothing major that will put him in debt he can't see out of, but just something to loosen your belt until you can get your financial house in order. Maybe by the time he graduates, you'll be able to help him out with the loan balance.

Lastly, and this isn't a great option, but if things are really so bad, perhaps home ownership isn't where it's at for you right now and selling and moving to something more within your current budget and with fewer monthly expenses might make sense. It's worth thinking about. I wish you the best and hope things improve. Renee

As for your child in college, I have less information. I would say ask the financial advisor/any CPA friends about if your child can become independent on paper for tax purposes, and therefore apply for financial aid her/himself. The college will also have a financial aid office; they will know all the ins and outs. Call them for advice. Perhaps your child can do work-study to offset tuition in the future? Perhaps your child may need to take some time off from school and work? I am sure that universities allow their students to take a leave and then come back without having to re-apply. You don't want to lose your house, and if you can't pay, you can't pay.

Refinancing. What are the parameters of the bank saying ''close but not close enough''? Find out. There may be something in there you can work with.

Finally, explore things like food banks, keep up with your second job, ask your teens to work and give part of their money to the family, etc. Can you take on a renter for awhile? I have heard that college-aged foreign exchange students are nice for not only the sharing of cultures but you also get paid.

Don't borrow money from your friend. Trust me; I have, and it gets weird. It's just addressing one debt with another. hang in there!

It's a brutal strategy but it will solve your problem. I really don't understand how you've made it this far with such a high mortgage. Mine is $2300, I make 2X what you do, and I still find finances to be stressful. Sorry about the nuclear option

As an advisor I've come across this many times before, feel free to email to discuss further if you wish. (and I understand you aren't looking to hire anyone, conversations don't cost anything!) David

- Sell the house and rent instead (I've got to believe you can find a very small place for a lot less than your total mortgage/tax/insurance expense). Maybe it's a one bedroom in an undesirable neighborhood. Perhaps that means you or your teenager has to sleep on a couch. Many people in this world live in much worse conditions.

- Stop paying for college. Your kid needs to either find work/loans/scholarship money or to Community College. They'll definitely learn the value of money and will probably become more determined than ever to avoid getting into the same financial predicamet that you are in when they get out of college.

- See if you can do a transfer of your credit card debt to a 0% interest card. I know these are teaser rates, but at least it'll reduce your interest expense for 6-12 months. Keep doing that for as long as the CC companies are willing to take you.

- I'm assuming you haven't saved any money and retirement is far from your mind, but it needs to be part of your plan. Your goal should not be to get to breakeven. It should be to get to a point where you can save money every month to a 401k and savings account.

I know the first two suggestions are brutal, but unless there are some assets or income you didn't mention, I'm not sure if you really have a choice. A concerned financial planner

2) Another helpful thing is Debtors Anonymous. It helped me personally very much. Specifically they have tools to help reduce your credit card debt and pressure relief groups where you sit for two hours with one man and one woman and talk about your money issues and they give ideas and solutions. You bring records and any documentation and tally your debt and come up with a viable repayment plan to keep your sanity, home and quality of life. The meetings are also a big help in terms of sanity and practical ideas from people who are in the boat with you, or have been in the past.

3) There is a woman from D.A. who goes to Alta Bates cafeteria on a Friday night, I believe from 6:30 to 8:30 and sits there writing up expenses. Anyone can join her. This is a great exercise and can help you come out of denial about where your money goes. Even if you have a pretty good handle on this, there is always fine tuning to be understood and dealt with. It can be helpful to put these ideas on paper and consult the pressure relief group. If it's hard to make time to actually sit down and do it? Well, there are others to do it with you, check your math, answer questions.

4) There is a good book, How to Get out of Debt, Stay out of Debt and Live Prosperously by Gerrold Mundis, a good book. He took some of the 12-step ideas and went to press with them. Still, it's helpful. 5) Look for relief from others. Is your college child working 10 hours a week to contribute to the cost of schooling or cost of living? Are you sure that dad cannot be held accountable? Have you consulted with anyone about that? These are my off the cuff ideas. Also, willing to chat. Hang in there!

However, I am still going to be stuck with Credit Card debt and I am afraid that my excellent credit rating will be damaged. So I am planning to withdraw more money from the IRA to pay off the CC debt. I would love to hear what the Financial Planners on the list have to say about using retirement funds to pay off Credit Card debt. I have another 401K plan from my current job that has some money in it, but I imagine that I will never actually retire as I am single with 4 kids, and only the first in college.

I hope that you consider selling your house, even though it has been a big hassle for me. It will really take away a lot of the stress. I know how it feels to spend 1/2 your income paying for your home. Anon

Drowning in debt; consolidation?

Hi all, I can't afford a financial advisor. Basically, we bought a house in the east bay before our house in SF (bought 4 y ago, 100% financing) sold. Then the market took a down turn and it didn't sell. It's being rented, but we recently had to stop making payments on our mortgage, as we simply didn't have the money. It's still on the market and we hope to get an offer for a short sale.

Meanwhile, we also have managed, somehow, to rack up close to $100,000 in credit card debt, much of it at high interest rates (some of it was used to cover closing costs for our new house). We own our own business and it's incorporated, but not enough money is coming in lately as the economy has slowed.

My question is: has anyone used one of those debt consolidation services before? I know it lowers your credit score, but at this rate we'll never be buying another house again, so that may not matter too much. We only have one car, paid for, so we won't be buying another one for awhile, either.

Thanks for any and all experience and advice. And please, we are humbled enough as it is; no 'I told you so's''. Thanks. Super Stressed Mama

Is it better to save or pay off credit card debt?

Due to some financial irresponsibility, a sudden job loss and a couple of other factors, we've built up some CC debt. We cashed in a 401k to pay off a big chunk of it, but we still have some left. We used up most of our savings during my job loss just to support the family. Now that we're up and running again in the employment arena, we need to start figuring out how to get our finances under control. We have to *quickly* save in order to pay the lovely property taxes due in Dec, as well as pay down our remaining debt. How do we do it? We can definitely save enough in time to pay for the tax bill, which is good, but that is putting all of our extra money every month into savings and not paying down any of the debt. I've gotten a 0% interest for 12 months card, so at least I won't be accruing interest during this time. Then what happens after we pay the bill? Do we split our monthly residual into two? Half to the cards and half towards savings? How have others done it? My goal is to have all the cards paid off by the end of next year, but I really don't know how realstic this is. Just as a point of reference, we're talking about $11.0k in credit card debt. How have others gone about organizing their finances in order to 'kill two birds with one stone'? fiscally responsible in '09!

Second, if you have to choose, it's almost always better to pay off debt than to build up savings -- because typically you pay more interest on debt than you can earn on savings. But you do need to have a bit of a savings cushion for emergency use, which most financial planners say should equal three to six months' living expenses. So if you don't have that, you may want to take the 50/50 approach or something for a while until you do.

Third, get rid of your credit card debt faster by reducing the interest rate on it. Do you have a home equity line? Do you have any equity in your house? You'll qualify more easily for a HELOC now that you're employed; the interest rates are generally low and you can usually deduct the interest you pay from your taxes as mortgage interest. And it gives you some emergency borrowing power too, which reduces some of the urgency for rebuilding your savings. Even if you can't get an equity line, perhaps it makes sense to get a personal line of credit or a consolidation loan, or at least to shop around for a credit card with a low rate and a free balance transfer, so you can get the best possible deal while you pay down your outstanding debt. Good luck! Glad we had the equity line when we needed it

Being sued by credit card companies

Help! Has anyone been sued by a credit card company? What should we do? Our house is being foreclosed on and we have sooo much debt. A few months ago, we had credit scores in the 700s. This is so crazy. We have a baby due any day now. Any recommendations for lawyers? Is that what we need? Please help!

Our friend had debts up the wazoo to many credit cards, loan sharks, you name it, and each of these companies used collection agencies. I went with her to discuss bankruptcy with Patrick Forte http://www.patforte.com/ in Oakland, and he seemed to be a very competent lawyer, but she didn't use him in the end, because she negotiated reductions of her debts as low as 20% with some of the agencies, and then she was able to handle the payment plans. Mr. Forte described bankruptcy settlements at 10%, but then the settlement folds in his fee ($3500 at the time) and some court costs, so my friend came out more or less even.

It sounds as if you're in a much more serious situation so I'd recommend a consultation with Forte since there's no fee for that. I don't know if Forte handles lawsuits, but I'm sure he can refer you to someone. If you're able to and decide to work with collection agencies, be very polite but assertive in your negotiations. I held my friend's hand through many of these stressful phone negotiations, and they all went the same way: The agent was almost always business-like but quite nice, actually; he/she would begin with a high figure (50%-80%), and, each time, my friend would reply with honesty that there was no way she could handle the payments, and the bartering continued until they'd reached that company's bottom line. Best of luck to you. You can get through this! Anon

In over our heads with debt!

We bought a house in the bay area that we could not afford and now a year and a half later, after using credit cards to make up the gap every month, we're drowning. With baby #2 on the way, we just don't know what to do. We are not extravagant in any way and after taking on extra jobs we're still in the hole every month. We tried bankruptcy but the amount that we were asked to pay every month would have still left us in the red every month considering child care for a second child. The lawyer suggested we just don't pay the credit card bills (and pay him $600 a month to basically take the phone calls). Has anyone heard of this? Please help. don't know what to do.

I know this is a really horrible time to sell your house but if you are facing bankruptcy this seems like it would be better alternative. Depending on what your mortgage and property taxes are you could save a bundle by renting. Plus, you could pay off your debt.

Is there anyway you can cut back the cost of child care? Many times people want to have an in-house nanny for their new baby when it's much less expensive and just as fine to use an in-home daycare.

Can you re-finance to help lower your cost? Living in the Bay area is hard. We own a home and have two kids in preshool and it seems like every month I hold my breath. I Feel your pain. anon

If you had any prospect of an increase in income soon, or if you're now meeting your monthly expenses EXCEPT for the accumulated credit card debt, an alternate possibility might be taking out an equity line of credit. Use that to pay off the credit cards, consolidating your debt at a lower interest rate. Make interest-only payments without penalty until you're able to increase your income and pay it off. This is, of course, a riskier choice since it doesn't actually get you out of debt. anon

Financial problems since buying house

My husband and I bought a house 1.5 years ago, when I was 8 months pregnant. We thought it'd be a financial stretch, but that we would make it work. My husband works in construction and has had several slow periods. Then we've had unexpected major expenses. I'm already working 2 jobs. We are extremely frugal, but still we've been using credit cards to make ends meet. We often talk about selling, but we'd probably lose $. We are a family of 5 in a 2 bedroom, so renting a room is not really workable. Building a studio is so costly. I feel trapped and I can't seem to figure out what to do. Who do I turn to for advice? I need some creative solutions. Or maybe we need to sell and just cut our losses now? Any suggestions, would be greatly appreciated. Thank you. Anon

Please don't sell your home unless you are in at least one or more of the following situations:

1) Selling your home will keep you from declaring bankruptcy 2) Rent for a 3 bedroom is less than your mortgage and there are plenty of 3 bedroom rentals to choose from 2) Moving to another area in the state or country will increase your income and lower costs

Otherwise, you may worsen your situation by selling. My only other suggestion is that your husband take a part time job during down periods or consider changing careers. Make sure you pat yourself on the back for working so hard to make ends meet and enduring numerous sacrifices by holding down two jobs. Best of luck. Anon

Stress and Debt Wearing Me Down

I need help getting my head above the ongoing, crushing stress that is choking me and making me further depressed by the day. I have student loan debt that is equivalent to a mortgage but without the house. I have a job that is sucking the life out of me with the level of stress and deadlines and negative conflict, but allows two work at home days per week and pays me well enough to just stay afloat of my debt, monthly bills, and child care as a single mom. I definitely can't get ahead in this area. My aging mom and some siblings live in the Bay area- which is the main reason I stay-especially as a single mom. The immense joy in my life is my toddler whom I adore and look forward to being with- most of the time; though, I have no time for myself at all and I'm becoming a bitter and angry person. It's hard to be here surrounded by so many beautiful, unaffordable homes and realize unless I sell my soul and compromise my relationship with my child (which I won't do) I will never really make a dent into my debtload to afford a home here. It feels that life is so damn hard and I resent those with wealth and who have it easy. I think I need a career change as well as an attitude change and maybe some anti-depressants, but I'm so swamped and overwhelmed, I can't figure a way out of it all or even what step to take first since I have almost zero time. Losing hope and no longer the upbeat, happy, joyful person I once was....it's becoming scary and I need to snap out of it for my chid's sake and mine. All comments and suggestions welcomed. overwhelmed

All-in-all, you sound like you're an excellent mom; a high-performer at work; well-educated; etc. You seem to be handling the demands of your life quite successfully -- except for the part about being kind to yourself & getting your own needs met. I've learned that part of being a good mom (or person) is finding ways to mother yourself. A brisk walk during your lunch hour; paying a neighborhood kid $5.00 when you get home from work to play with your toddler for an hour while you decompress a couple days a week; a warm bubble bath & a glass of wine after your child goes to bed; etc. are all ways that you can cut yourself a little slack. You also may need to find ways to cut corners at work (i.e. figuring out which tasks can be skipped or not done absolutely perfectly -- I call it the ''good enough'' theory)

Don't worry about not being able to afford to buy a house. Things have a way of working out. You wouldn't believe some of the stuff that goes on inside of some of these perfect-looking houses. I grew up in New York, where real estate has always been un-affordable & many successful people rent all their lives (& sometimes even buy a nice vacation cabin in some pretty, laid-back area). Things do have a way of working out. Good luck! -- Home-owner paying property taxes with credit cards

Single mom in financial trouble

There's a single mom in my neighborhood who has run into some financial trouble and is at risk of losing both her car and her rental home. She works full time, plus weekends when her children are with her ex-husband (aged 5 and 9), but is unable to make ends meet. Her ex-husband had another baby with his new wife, and her already-inadequate child support has been reduced. She's extremely hard-working, but still falling behind. Are there any resources out there to help someone in her situation - and to stop the downward economic slide that would likely occur if her car is repossessed? (i.e., trouble getting to work, job loss, etc). Are there agencies that can provide her with emergency grants, money for groceries, etc? She earns approx. $1,800 per month; is that too much to qualify for TANF or other public services? Any advice or leads you can provide to help her would be greatly appreciated. Worried friend

Serious financial difficulties - relocate?

We are having serious financial difficulties, mostly due to a humongous mortgage. I cannot get our budget anywhere near being balanced, so even saving a dime is not going to happen. We have accrued too much debt. SOOO...we are wondering, why live in one of the most expensive places on earth? By moving, we could save on a mortgage and therefore all the expenses that come with owning a home. However, we are aware that income may not be as high. I'm seeking advice from anyone who has been in this position and made the decision to move. Are you better off financially? Are you happy about your decision? Do you regret your decision? Basically, the only thing that keeps us where we are is a job. Everything else, we can do elsewhere (yes, the Bay Area is great...but so are many other places) Bay Area BROKE

We now live in a house 2.5x our CA house with every amenity we ever wanted or dreamed of, we have $ in the bank, unlike in the bay area where we lived mortgage to mortgage, and we live in a climate that is gorgeous 8 months out of the year.

BUT, my husband is making 20% less than he was in CA, the political climate is extremely conservative, our neighbors are non entities as they sometimes don't even wave when they are taking out the trash, the lack of culture and diversity in everything from dining to shopping is ridiculous, chain stores and strip malls are abundant.

We sit and look at each other sometimes and wonder why we did this. Maybe we chose the wrong place, I don't know, but I do know that money doesn't equal happiness, and there ain't NO place like the bay area.

Sign us, Lefties trapped in Pleasantville

How to get out of debt?

I am trying to help someone figure out how to get out of credit card debt. Does anyone know of a good organization to work with on this in the East Bay or SF? Thank you, Anon

Collection agancy calling about a 9-year-old debt

Yikes! I just received a letter from a collection agency for a debt that I defaulted on over 9 years ago (unfortunately due to a car accident and inability to work and no disability insurance, otherwise perfect credit before this... ) According to a credit report from Equifax in 1997 it was ''charged off account''. Last year I received a personal credit report from Experian and it was not even listed. I assumed it was written off. Now I receive this letter from a collection agency and I am not sure how to proceed. They don't threaten legal action but it sure is scary. The original debt was 12k and now it is 22k and I made under 22k last year and have serious grad school debt so I am just surviving right now. Any suggestions or where I can get advice on how to respond? Thank you. Anon please

It's a large amount and very tempting to the collection agencies and they know all the right words to say that will trigger your guilt, fear, anxiety, etc. Above all, don't give them any money as a good faith gesture. This is a common trick that results in starting the clock all over again on your account. Check with the Fair Debt Collection Act (google it) to find out your rights and obligations.

Of course, don't ignore any summons served on you. It's not likely to happen given what I've mentioned about the statute of limitations, but you never know. And don't confuse a real summons & complaint with those legal-looking collection agency form letters.

It's not about not paying your bills, it's about something this old being uncollectable because records aren't available. anon

Threat of lawsuit over old debt

I received a letter from an attorney's office in Stanton, CA about an old Capitol One Bank credit card bill, from 2001, which I was unable to pay off due to unemployment, financial desititution, and homelessness. I usually just throw away these letters, knowing after 7 years (I think) these debts are null and void, and must be removed from credit reports. But this I read this one, which threatens a lawsuit to collect over $1100 (more than twice what I originally owe them), under 1033(b)(2) of the California State Code of Civil Procedures.

My first instinct is, this is another threat, but I wonder if others have experience with this. I initially presumed this was another threatening letter to intimidate me into coughing up the money. I know the credit industry is strengthened by the recent federal bankruptcy law; I wonder if they really might try to take me to court.

I've been saving my money in event of future financial disasters and homelessness, don't want to further feed the coffers of capitalist multibillion corporations. I don't even have a credit card, and pay cash for everything.

Does anyone have any experience with this? Thoughts? Suggestions? (No lectures, please.) Thanks.

Sometimes you can contest these things. I had one where a collection agency came after me for $100. I showed them a letter that said I had paid it. End of discussion. In your case, however, it sounds like you don't dispute the fact that you did not pay the money.

I believe the lawyer can take you to court. Instead of paying the full $1100, you could offer a deal to pay something less. Call the credit card company an ask if they'd settle for the original amount (although I think once they hand off the collecting duties to an agency, they have basically washed their hands of the issue and won't discuss anything with you). In which case you can call the lawyer and negotiate a settlement.

I think you're right in believing that your old debt will ''disappear'' after 7 years and it helps to explain why, now, you are getting a letter from a collection agency/attorney. It's their last chance to get the money back and your original creditor probably already wrote off most of the debt.

Letters threatening suit are very common, but please note that according to the Fair Debt Collection Act, no agency can threaten to sue. You'll notice the letter says ''we may consider legal action'' instead of ''we will sue you''. If they threaten, they must go forward with it. If you have assets like a house, there is a better chance you will be sued as the creditor could put a lien on your house if they win and you don't pay.

The attorney may sue you but chances are they won't because lawsuits costs money, you may not have assets and the original creditor may not be willing to pay for the fees associated with suit. The lawyer (if in fact it is a law firm) may decide to go for it. Remember also that there is a statute of limitations on collection on past due bills. Imagine if you did not owe the money, how could you prove it 7 years later?

You have rights and options. Hope you get all the information you need. almost debt free