A small businessman, an acquaintance of mine, got over his head in debt a short time ago. When he could no longer pay his bills on time he became harassed and hounded. With seemingly no way to turn, he took his own life. A sad, sad ending for his friends and family – and for the world.

Every day similar episodes happen all over our great country. The unsecured debt to those enticing behemoth credit cars companies is perhaps the largest contributing cause. With these cards an unprofitable small business can be nursed along much longer than is should be. An extravagant lifestyle to please a loved one is another way to build up those frightening balances. Of course, there are many others as well.

Desperately, the credit card debtor tried to find ways out when he no longer has the wherewithal to pay even the minimum payments on time. Mortgage the old homestead. Maybe find a good friend or relative who will grudgingly pay off the bills for him, leaving him with a lifelong and not-so-friendly obligation.

Well, the poor debtor will be making a very costly mistake if he manages to pay off his card balances bang! all at once, just like that. What would be wiser for him to do is stop paying all credit cards completely. Just write on each of the payment coupons that he is no longer able to pay anything at all on this bill. After two or three months the card companies will start their tried and true methods of salvaging whatever they can from this disintegrating account. They will call to try and get the debtor or his spouse on the phone where they can offer conciliatory methods for handling the balance.

There is a very good piece of lawyer's advice: Never answer a lawyer's letter. This applies to phone calls, too. Never, never talk to any of their representatives. The next step is letters offering consultations and compromises. Throw all of these away immediately. At this point you don't want to file for bankruptcy, and the card companies don't want you to, either.

With unsecured debt, the credit companies don't have many options. Their interest rates have built into them the contingency of losing some of the moneys lent. Their bean counters and statisticians can tell them almost to the dollar the percent they will never recover. There are consultants all over, usually moonlighting in the banking community, who, for a few dollars, will give them a concise report on whether it would be cost effective to bring you into court on the debt. Also, they can sell the balance to debt collection agencies who are experts at hounding and harassing for the rest of seven years since your last payment.

At this point, it is perhaps six or eight months since the debtor stopped paying on his cards. Most of us are reasonably honest. We don't want to cheat anyone. Bankruptcy is repugnant, but we do want to reduce our debt as cheaply as we can. Do not talk directly to the card companies. An old lawyer or a beginning young one will sometimes negotiate very cheaply for you. An accountant-type or an intelligent politician of your acquaintance could help. The debtor's goal should be to get the compromised total payoff figure down to between twenty and thirty percent of what he owed when he stopped paying. Disregard all the later penalties and interest. The debtor's high interest slate will be wiped clean and he will just have a relatively small, manageable debt to handle.

This type of action will reflect somewhat on your credit score, of course. If you are old and unlikely to want any big ticket items on credit, so what? If you have a loyal spouse who is willing to do your business in their name for a while, so what again.

In the long run, handling your unfortunate credit card experiences in this way will let you live comfortably with your religion and your conscience. If your learn your lessons well, your future financial life should be better, too. But for all of us the best bet is to live within one's means and avoid creating this unpleasant situation at all.

In the unlikely event that one of your creditors sues you, be sure to go into court on time and ask for a court-appointed lawyer. Then ask for a continuance. When the case comes up again, make sure there is not a responsible officer in the court for the suing company – there probably won't be. This country's justice system guarantees you the right to face your accuser in open court. Your opposing lawyer is usually local, and using hearsay evidence. Ask your lawyer to inform the court (the judge) of this and ask him to dismiss the case. Most judges will throw the case out, citing lack of prosecution.

Marty Harty
Barrington, NH