Ask Dave: Lumping it
By Dave Ramsey
Sept. 28, 2013 at 4:28 a.m.
Dear Dave: I have $400 in debt on a credit card, and I haven't made a payment on it in about two years. The debt has been sold several times, and now the amount they're asking for is more than $1,000. I'd like to work something out, but how do I know the collection company that is calling me now is legitimate? - Lorenzo
Dear Lorenzo: It's normal for a debt this old to have been sold a few times. My guess is the company that's calling you is legit, and they probably bought the debt for pennies on the dollar.
Whatever you do, don't set up a payment arrangement. They're asking for more than $1,000 because they've added stuff like late charges and interest. Let's go back to the original amount of $400 and see if they'll accept a one-time, cash payment to settle things. Make sure you get it in writing if they accept and don't give them a dime until after you get the written agreement. Then, once you have the agreement, send them $400. Do not, under any circumstances, give them electronic access to your checking account.
You've waited a long time to take care of this, and in the process, you've made things more difficult. I'm glad you've decided to clean up your mess, though. Late is better than never, Lorenzo. Just remember, you're still responsible for debts you incur - even if the company you originally borrowed from has sold it to someone else.
Dear Dave: Is it ever OK to stop paying or drop health insurance altogether in order to pay off debt? - Shauna
Dear Shauna: No. The No. 1 cause of bankruptcy in America today is medical bills, and credit card debt is a close second. That doesn't mean medical bills only of the uninsured. It also includes money from co-payments, deductibles and the fact that people didn't have any savings. One accident or unexpected event can leave you with thousands of dollars in medical bills, and that's even with a good health insurance policy.
I don't want anyone walking around without health insurance. But I'm not talking about the Affordable Care Act and all the other mandated crap the government is trying to shove down our throats.
I'm talking about a solid health insurance plan along with having some money saved. Do this first then you can have all the philosophical discussions you want about whether or not you're supposed to pay for someone else's health care and upkeep.
At the end of the day, it's absolutely vital that you have your own health insurance. I hope I haven't been unclear on this topic.
For financial help, visit daveramsey.com.