Client calls me and says “I don’t know why AMEX is suing me. I have been paying as much as I can to all my creditors, sometimes only $25 per month, but I am acting in good faith.” This client was doing exactly the wrong thing.
A partial payment to a creditor is considered the same as no payment at all. If you cannot afford to pay your minimums, or if you believe that paying minimums will never allow you to pay off your debs, it is better to skip payments to all but one and concentrate on paying off that one account fast (in two or three payments max). You’ll take a hit on your credit, but remember, the partial payments are being reported to the credit bureaus as NO payments, so you might as well use your limited resources effectively.
You can also stop all payments and save up money for a lump sum offer at a discount. Creditors usually do not agree to discounts until the account is seriously delinquent. I am not recommending you stiff your creditors; I am recommending you act wisely in your circumstances.
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