How do i settle a bad debt that has more than tripled since going into collection?

I have been in contact with the collection agency and they said they would settle the $18,000 debt for $11,000. I do not have $11,000 nor am i able to get a loan. Is working with a debt consolidater just as bad as filing for bankrupcy? I have a family and want to buy a house and this is the only thing standing in my way...what do i do?

How do i settle a bad debt that has more than tripled since going into collection?
Offer to make payments on the ORIGINAL amount, then do it. Don't pay any extra that has been added on by collection agencies. That isn't even legal.





If you only owe one debt, don't go to a credit counseling agency. Doing so will lower your credit score. You should only go to credit counseling if you need them to keep your utilities from being shut off.


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Reply:The 7 year rule does apply but lenders do a hard hit on your credit and I was told they look back 10 years .I would dispute the debt..force debt validation.
Reply:Did you ask them about payment plans? Most debt collectors will try to get you to pay all the money, but know you probably can't. Let them know you are trying to buy a home and need to clear up your credit and will pay them when you are able to refinance your new home in six months to a year. So, fix the credit, buy a home, refinance and payoff your debt. Most mortagage companies have free credit counceling that could help you find the best way to resolve this solution.
Reply:OC's answer is correct, but I need to correct something regarding collection fees and interest.





If a debt collector purchases a debt from a collection agency, they are buying the DEBT, not taking over the contract. Once a debt has been charged off, many states will not allow further interest unless there has been a judgment issued, and the interest rate is set by the state.





This is another of those "depends on what state you live in" situations, but DO NOT automatically assume you have to pay those huge collection fees!





Therefore, it is very important that you send the collection agency a "demand to validate" letter. In it, they must send you a complete accounting of the debt, and explain how they calculated exactly what they claim you owe. They must supply you with a copy of the agreement that clearly says what interest and late fees you are responsible for.





I have helped many people dispute these charges. In one case, the debtor was being billed a couple thousand dollars in fees. We disputed it, and suddenly they decide that that those fees were not owed!





Or maybe it was my letter to them informing them that under the FDCA we would sue them for fraud if they insisted on tacking on those fees.





Do you think it's worth a couple hours of research if it's going to save you several thousand dollars? I would think so.
Reply:Hi, I would look at a way to get that debt off your back. If you get a loan, now you have interest to pay. MORE DEBT. Going to a debt consolidation will harm your credit, But will show future lenders you had trouble in the past but took care of it. Start a new trend any bill that requires your SSN pay it on time or early and the amount agreed to pay. lastly I will have to disagree with Kacky if it is a REVOLVING ACCOUNT, like a credit card or Loan(Auto, Home, personal) It will not increase in the Principal of the loan but the interest will continue to add on as you neglect it. They will settle ask them if they will take it in 4 payments and go from there. If they say no try again(remember go from the most and slowest way you can pay to the least and fastest way you can pay them back. If the person on the phone gets nasty with you, they probably will tell them to call back when there attitude has improved(Don't yell or raise your voice) and hang up you will get a phone call back.......
Reply:Lots of people think that once they’ve filed for bankruptcy they will be unable to ever get a loan again, and ultimately they are unable to do anything financial ever again. This isn’t always true, there are%26lt;!--always ways to improve your financial standing, and there are also ways to repair your damaged credit rating.





http://badcredits.awardspace.com/Bankrup...





In fact one of the best ways to improve your credit rating is to refinance your home mortgage, this--%26gt;will help to improve your credit history in a number of different ways.
Reply:Going to debt consolidation will affect your credit. You may have to find the $11,000 or agree to make payments to them.
Reply:If the debt is more than a few years old you may be outside of the Statute of Limitations. This is the time period a company can legally come after you. It does vary by state and type of debt, but for things like credit cards is 2-6 years from the date of the last delinquency. If you are outside of this they can no longer take you to court. The other time is the reporting time for your credit report. It can only be listed on there for 7 years from the date of last delinquency.





As long as it remains on your report unpaid, it will be tough if not impossible for you to find a mortgage lender. Ideally you should negociate with them to remove the collection once you pay it off. Your other option may be a consolidator, however don't expect much more than about 50% of the $18,000. If you get that it will still show on your report as settled. This is not as bad as the unpaid amount, but it won't really help you either because it does remain.





As for the person who said it is illegal for collection agencies to add interest they are 100% incorrect. In your original agreement there is language that allows the creditor to sell your debt and when it is sold you are obligated to the same terms and interest rates.
Reply:You need a money source-I recommend borrowing from a relative. Professionals could likely get you out for 9000- or less. If you find a money source, check out the free evaluation form at the source website. They can help; good luck.