Friday, March 29, 2013

How a Trial Loan Modification Affects Credit Scores

Loan modification – a process by which your mortgage lender changes the terms of your mortgage to lower your payments and help you avoid foreclosure – comes with risks to your credit scores. Struggling homeowners often don't realize that when they pursue a mortgage modification, they could be sacrificing their
good credit scores. For some people, credit damage is the very thing that makes foreclosure so scary. So its terribly sad and ironic when these people get a loan modification approved only to discover their credit has been trashed in the process. I'm going to tell you how to mitigate the damage loan modification does to your scores and come away from the process with your credit rating as intact as possible.

Qualifying for Loan Modification By Missing Payments

Although the government's official Home Affordable Modification Program (I never understood that whole “Making Home Affordable” or “Home Affordable Modification” business. The syntax there is just terrible. Has Uncle Sam ever heard of plurals?) does not require you to miss payments, your bank might.

Here's the rationale behind the “You have to miss payments or you can't get a loan modification” song and dance that so many lenders sing: They don't want to modify your home. Don't get me wrong, foreclosure is pricey and while most states allow lenders to sue you for those costs, that's just additional time and resources the lender has to put up. A loan modification reduces the bank's profits. So if you're still paying your mortgage – no matter how hard that mortgage payment makes it for you to get by each month – your lender figures you can continue making that payment. In the lender's eyes, if you're not missing payments, you're not hurting and thus don't need a mortgage modification.

Missed Mortgage Payments and Your Credit Score

Every time you miss a mortgage payment, even if you do it strategically just to qualify for a loan modification, your credit takes a hit. The worst part of this is that the better your credit is, the more missing mortgage payments hurts your score. For example, if you have a credit rating of 750 and you miss a mortgage payment, you could see your score drop 100 points overnight. Because the FICO scoring formula is a trade secret and the other entries on your credit report play a role in the points you gain and lose, there is no surefire way to know exactly how much a single payment hurts you. The bank, of course, could care less about your credit. The credit bureaus are the same. As a matter of fact, I read an article just yesterday on Experian's website claiming that the credit hit you take when strategically missing payments to qualify for modification doesn't matter because – get this – if you need a modification your credit must already be in the toilet anyway.

Ignorance. Plain and simple.

Loan Modification Reporting Codes Could Trash Your Credit Score

The reporting codes a lender uses when it reports information to the credit bureaus makes all the difference in situations such as these. When any creditor reports an account to the credit bureaus, it does so using a code. Once you enter a trial modification, your mortgage lender can report your modified loan in one of two ways: AC or CN. One is good. The other will gradually destroy your credit.

The CN and AC Trial Modification Reporting Codes

When the HAMP program was first put into practice, lenders had no way to notify the credit bureaus that the new, lower mortgage payments were the result of a loan modification trial period. Such things were
Payments too much? Modification can help.
uncommon, and the code for reporting them did not exist. So did lenders get together and rally for a new reporting code that was more accurate? No. They reported trial modification payments to the credit bureaus using the “AC” code. AC denotes partial payments. These consumers' payments were not, of course, partial. They were the new assigned payment. Because the modification was not permanent, however, these borrowers' credit scores suffered.

In 2010, a new reporting code, “CN,” was finally introduced that demonstrated partial payments as the result of a trial loan modification. The CN code has no immediate negative effect (although it may in the future, should FICO decide that consumers who are undergoing a trial modification present a greater financial risk to other creditors).

Verify How Your Bank Reports Your New Home Loan Modification

When it comes to credit, I've never been able to tell if loan officers lie through their teeth because they just don't care (or don't get a commission if they can't make things work out) or if they tell tall tales as a result of their own ignorance and inability to admit that they simply don't know the answer to some of your credit questions. So, here's your warning: Don't listen to anything a loan officer tells you about your credit. Ever. EVER. By all means, ask how different financial actions will impact your report, but never take the loan officer at his word. Always double-check on your own.

For this reason, you need to insist that your lender report your trial loan modification as “CN” and not “AC.” If you can push hard enough to get it in writing, do it. And always, always, always pull your own credit report afterward to make sure that your lender is keeping its word. The last thing you want to do is save your home only to throw away your good credit.

Related Articles: 

Wednesday, March 27, 2013

How to Dispute and Remove Unauthorized Hard Pulls on Your Credit Report

When you pull your credit report, it includes a list of credit inquiries. This is a list of the companies that have requested to review your credit report over the last two years. Credit inquiries connected to financial transactions, such as those conducted by lenders, collectors and other people you either do business with or have considered doing business with, are known as "hard pulls." A hard pull slightly damages your credit score. One or two hard pulls a year isn't going to hurt you, but numerous hard pulls over a short time frame can cost your credit score a considerable number of points. In some cases, you may be able to petition the credit bureaus to remove certain hard pulls that you did not authorize.

Permissible Purpose and Credit Inquiries 

A company or individual can't just pull your credit reports at any time for any reason. Your credit reports are a smorgasbord for identity thieves, and the credit bureaus keep a tight leash on the information. The Fair Credit Reporting Act requires that a company have permissible purpose to access your credit reports. Your credit card company, for example, has the right to periodically pull your credit reports to review your financial standing. It has permissible purpose because you have an account with the company. A credit card company you do not have an account with and did not apply for an account with, however, lacks permissible purpose to access your credit records. Non-permissible purpose pulls are a violation of the FCRA and the law.

Why You Should Dispute Hard Credit Pulls

Numerous hard pulls can tank your credit scores.
Credit inquiries remain on your credit record for two years, on average. I believe this time period is slightly shorter for TransUnion, but don't quote me on that. Your credit scores recover fairly quickly from a hard credit pull, but as long as the pull is there your current and future lenders will see it. Credit pulls from lenders and credit card companies make it appear that you are shopping for debt. This sends up a red flag to lenders that you may be in some sort of financial trouble – making doing business with you risky. Don't think that your credit score is the only aspect of your credit history that matters to lenders: inquiries matter too.

But what if the company conducting the inquires isn't a bank? What if the hard pulls come from a collection agency? That looks even worse to lenders. Collection agencies generally pull your credit records to evaluate your financial standing before slapping your credit report with a negative tradeline. Collection agencies are notorious for getting mixed up, and the last thing you need is to have future lenders balking at the sight of a collection agency's hard pull. You don't have to sit by quietly while companies violate the FCRA and abuse your credit report.

Have Hard Pulls Removed From Your Credit Report

You should recognize credit inquiries from lenders and creditors you either currently do business with or applied for an account with. When you find hard pulls you don't recognize on your credit report, however, its time to take action. Write a letter illustrating the following:

  • You did not apply for credit with the company
  • The company did not have permissible purpose, and thus pulled your credit illegally.
  • Demand proof or removal of the inquiry

The FCRA requires creditors to make fair and accurate reports – and credit inquiries are included in this!

Sample Letter to Remove Hard Credit Inquiries

To give you an idea of what I'm talking about, I'm going to include a sample letter to a creditor requesting that it remove its hard pull from my credit report. Feel free to use and modify this letter for your own purposes.

Dear Random Creditor:

My name is Lee Edwards. I recently pulled my credit reports from Experian, Equifax and TransUnion and noticed a hard credit inquiry from your company on all three of my credit reports. You are not one of my current creditors, nor do I recall ever applying for a loan or credit card with your company. The Fair Credit Reporting Act requires that you have permissible purpose before accessing my credit records. Because I have no business relationship with your company and never sought one, you lack that permissible purpose. Your company accessed my credit information illegally and, in accordance with the FCRA, I demand that you either delete your hard inquiry or provide me with written proof that you have or had a business relationship with me that authorizes you to make such an inquiry. 

If you would like to reach me to discuss this matter further, you can contact me via email at or by phone at (555) 555-5555. 

Thank you,
Lee Edwards 

Don't Worry about Soft Pulls!

Soft pulls and hard pulls are two different beasts. Soft pulls don't count against you and don't hurt your credit scores. Don't bother wasting your breath and time trying to get soft pulls removed from your credit reports. Hard pulls are the only inquiries you should bother attempting to remove.

Related Posts:

Deleting Collections From Your Credit Report

Removing Re-Aged Collections From Your Credit Report

Collection Agencies Conduct Hard Credit Pulls Without Permission

Thursday, March 21, 2013

Credit Checks: Do Collection Agencies Conduct a Hard Pull or Soft Pull of Your Credit Report?

If you owe debt to a collection agency, expect that agency to pull your credit report. Not only does the information on your credit report help debt collectors track you down, it also gives the company information about whether you are likely to pay or not. But beware – a collection agency can do more to hurt your credit  score than merely adding its negative tradeline to your credit report. Why? Because collection agencies conduct hard pulls.

Credit Checks: Hard Pull vs. Soft Pull 

Whenever a business pulls your credit report, it conducts either a hard pull or a soft pull. A hard pull dings your credit score (generally no more than 10 points, if that) while a soft pull has no impact on your credit scores at all. Hard pulls are associated with financial transactions in which there is a measure of risk, whereas soft pulls are not. For example, if you apply for a loan or credit card, your lender will conduct a hard pull because the inquiry is related to a financial transaction. When an employer pulls your credit or you pull and review your own credit report, the inquiry falls into the "soft pull" category because is not connected to a financial transaction.

Pull your own credit online at
Regardless of whether you have any intention whatsoever of paying your delinquent debt, the collection agency's credit check is connected to a financial transaction. They want to see your financial history to determine the best way to get you to pay up.

Collection Agency Made Numerous Hard Pulls 

The Fair Credit Reporting Act allows your current creditors to pull your credit reports whenever they wish. This includes debt collectors. Any rational person would expect a collector to pull their credit report intially, but some collection agencies make multiple hard pulls. If the collection agency's trade line on your credit report weren't bad enough, multiple hard inquiries within a short time frame can literally kill your credit scores. Some collection agencies go so far as to pull your credit report every month.

Why do they do this? Most will claim they do so to keep an eye on your assets and see if anything in your financial life has changed – rendering you able to pay off your debt. But collection agencies are capable of conducting soft pulls to meet this goal. If a debt collector is conducting a hard inquiry every month, the company is likely intentionally damaging your credit score as much as possible. This is especially true if you still have a decent credit rating after the collection trade line appears on your report.

Also, negative information hurts your credit scores less as time goes by. By making numerous hard credit inquiries, debt collectors make your life that much more difficult. The rationale behind this (imho) is, "If we harass these debtors for long enough, they'll eventually pay us simply to get us off their backs." Even worse, your current and future creditors can see which companies have conducted hard pulls in the recent past. A slew of hard inquiries from a debt collector can indicate you're in financial trouble – leaving future lenders to think twice before doing business with you. This serves two purposes: it makes you more likely to pay off the debt to stop the harassment and it also reduces your chances of acquiring new debt – leaving you extra income that you can now apply to your collection debt.

Related Articles:

Collection Agencies Conduct Hard Credit Pulls Without Your Permission

How to Get Real Free Credit Reports Without a Credit Card

Collection Agency Re-aged Derogatory Information on Credit Report

Saturday, March 16, 2013

Can a Collection Agency Sue a Co-Signer?

Think before you co-sign!
Not everyone is flouncing around with perfect credit – especially in the wake of the recent economic meltdown. At the same time, the demand for credit has increased. People who've always used credit sparingly in the past are now finding themselves counting on their credit cards to get them through disastrous financial situations – and those situations can decimate credit scores. If you're one of the lucky few who pulled through without maiming your credit scores, don't be surprised if friends or family members ask you to co-sign their loan or credit card applications. Doing so, however, gives your loved one the power to pull you down into a financial tar pit right alongside him.

Your Responsibility As a Co-Signer

When you co-sign for a debt, you are potentially handing over your income and good credit score in order to help a loved one. As a rule, co-signing carries NO benefit for the co-signer – only risk. Nobody co-signs a debt believing that they'll end up on the hook for the payments. But even if the debtor is financially responsible (and that's an iffy prospect, given the fact that the debtor needed a co-signer in the first place), circumstances beyond their control could leave them unable to make the payments.

That's where you come in. The creditor doesn't care that you weren't expecting to be saddled with this debt. Nor does it matter if you are financially strapped yourself and simply can't afford the payments. In some cases, creditors and collection agencies can pursue an account's cosigners for payment – even going so far as to file a lawsuit – without first pursuing the debtor. This simply means that when the payments stop, creditors and collectors can bypass the debtor and make a beeline for you.

Collection Agencies Can Sue Co-Signers

People in a financial bind pay priority debts, such as mortgages, car payments, utilities, etc. first and apply any leftover income to non-vital debts, such as credit card bills and collection payments. Given the high volume of people in trouble financially, many collection agencies have had to turn to alternate routes of collecting debt. Suing the debtor and/or his co-signer is one such method.

The exception to this rule occurs if the debt is an old one and beyond the statute of limitations in the debtor and co-signer's state. Occasionally an unscrupulous collection agency will try to file a lawsuit after the statute of limitations expires, but either the debtor or the co-signer can use an expired statute of limitations as an airtight defense in a debt collection lawsuit.

Avoiding a Debt Collection Lawsuit As a Co-Signer

Want to say out of court? Don't co-sign!
If a creditor or collection agency decides to hang you, the co-signer, out to dry, your options are limited. You either pay the debt or you take the credit damage and other consequences connected to a collection judgment. These include, but are not limited to: wage garnishment, bank levies and asset seizure.

An even better way to prevent a debt collection lawsuit is not to co-sign in the first place. The account goes onto your credit report as well as the debtor's. This means all activity connected to the account such as high balances, missed payments, etc. can and will affect you. Co-signing is like drugs kids, just say NO. And don't you dare let yourself get pressured into co-signing by a loser family member who can't keep his financial ducks in a row. Don't feel pity. Don't make excuses for the person. And above all, don't co-sign!

Friday, March 8, 2013

Can You Settle With a Federal Student Loan Collection Agency?

They can seize everything but your diploma
Large debts are hard to swallow when repayment time comes around. These debts are even harder when they're the result of defaulted federal student loans. If you're struggling to repay your student loan debt or have already defaulted and are fielding daily calls from debt collectors, you probably already know that student loan debt is nearly impossible to get rid of. Even bankruptcy, in most cases, won't wipe away your student loan debt. In some cases, however, a settlement is possible if you know what to ask for.

Federal Student Loan Settlement Rules and Limitations

If you ask the collection agency handling your student loan debt for a settlement, you're likely to hear something along the lines of "You can't settle student loan debt." This is both true and false. The federal government won't allow you to pay less than the principal balance you owe and call the debt paid. It will, however, allow you to reduce your debt by lowering interest charges or eliminating collection fees. When you consider that the standard collection fee for defaulted education loans is a whopping 25%, settlement starts to look like a very good option indeed.

Debt Collectors Don't Want You to Settle Your Student Loans

The problem you'll encounter when attempting to reduce your student loan balance is the collection agency itself. In most cases, debt collectors receive bonuses and/or commissions for the amount of debt they collect.  Thus, its really not in a collector's best interest to let you settle your student loan unless there is very little chance of the collector receiving payment any other way.

If a collector won't work with you, hang up and call back until you find one that can. The U.S. Department of Education gives collection agencies the right to approve three types of student loan debt settlement:

  • Types 1:  90% of the principal and interest charges. 

This doesn't mean that you'll only have to pay 90% of your original loan balance. Remember, you can never settle a student loan for less than the loan's principal balance. The 90% figure is the principal plus the interest. For example, if your principal balance was $40,000 and your interest charges were $10,000 that leaves you with a total of $50,000 (not including your student loan's collection costs). You would need to pay at least $45,000 to settle the debt using this method.

  • Type 2: Waiving collection charges

Once you default on your student loan, you don't only owe the principal and interest, you also owe collection charges. These charges can tack thousands of extra dollars onto your loan. If you're willing to pay the full principle and interest, however, you may be able to get these collection charges waived.

  • Type 3: Reduce interest by half

This one is pretty self-explanatory. For this type of student loan settlement, you'd need to pay the loan's principle and collection costs, but only half of the loan's interest.

The collection agency may utilize any of these three settlement methods without prior approval from the U.S. Department of Education.

Settle Your Student Loan With a Lump Sum

As excited as the prospect of reducing your student loan debt may be, I might be about to burst your happy little bubble – you'll need to pay the settlement in a lump sum. Yeah, that one hurts, doesn't it? Here's the deal, the federal government has the right and the ability to squeeze the entire debt out of you over the course of your lifetime. They can garnish your wages, seize your bank accounts, seize and sell your personal property and garnish your tax refunds. There is no statute of limitations on a student loan debt, so these forcible collection activities can continue forever and ever amen.

Settling student loans may break the bank

If you're a big, powerful government entity and a debtor owes you $50,000, you're not going to cut him a $5000 break unless there's something in it for you. Since the debtor would be paying in payments anyway, it does not benefit the Department of Education in any way to accept payments for $45,000 when they could be getting payments for $50,000. You'll only make it worth their while to reduce your student loan debt if you give them a lump sum up front. They benefit by not having to wait for the money and you benefit by getting the loan settlement you need. The catch here is that if you had that kind of money just laying around, you wouldn't be trying to settle your student loans in the first place. Hence the reason settling defaulted student loans isn't an option for most people.

Asking for a Written Settlement Offer for Your Defaulted Student Loan

If the collection agency agrees to settle your student loans, restrain yourself. Running to the bank and getting a nice fat cashier's check or money order and sending it straight to the collection agency is a bad idea indeed. Before you pay, ask that the collection agency put your debt settlement offer in writing. Collection agencies responsible for recovering student loans don't magically become ethical organizations just because they have a government contract. Collection agencies that collect on defaulted student loans are just as likely to screw you over as those that collect other forms of debt.

Review your settlement offer carefully and make sure it clearly illustrates the terms of the settlement and the fact that any remaining balance will be forgiven. If the agreement does not absolve you of your responsibility for the balance, you shouldn't be surprised if another collector shows up a few months down the road demanding that you pay the $5000 or so that you saved when you settled your federal student loans. Remember, the phrase "written off" is NOT the same as "forgiven."

Related Posts:

Student Loan Collection

Defaulted Federal Student Loan Collection Fees

Can a Collection Agency Take My Tax Refund?

Thursday, March 7, 2013

Reader Question: Medical Collections Never Sent Bill

I received a call recently about a $200.00 medical bill from 2009. It was for lab work that my primary care physician had mailed to an outside lab. The CA claimed they just found a number for me which is doubtful seeing that I am the only person with my name in the US and, like everyone else, I have Googled myself in the past and there is plenty of info including my phone number available and has been for years. I also use the same search services like Accurint at my place of employment and I know my info is out there. I requested the original bill by mail and received it which showed it had a very old address of mine listed, hence my never having received it.

I have and have always had a perfect credit score and have never paid a bill late. I'm mad as hell that someone ele's mistake may sully my credit history. I certainly have the means to pay the bill but want to wait to see what if anything can be done to salvage my credit score. Thanks, I have learned much from reading your site although I would have rather not to have ever had to find your site.


Dear Anonymous,

Most of the frustration I get from clients in regards to collection agencies is related to the collection agency hunting them down and pursuing them endlessly. It's good to remember that collection agencies can be just as frustrating when they don't put forth much effort at all. 

Your first step should be to get copies of all three of your credit reports and see whether the collection agency has already added its trade line to your reports. You can get one free credit report per credit bureau  per year. The ONLY website authorized by the federal government to provide consumers with their free annual credit reports is If you order them anywhere else (including from the credit bureaus) you'll have to give out your credit card number and sign up for some ridiculous program or other. 

If the collection agency's trade line doesn't appear on any of your reports, the solution is as simple as agreeing to pay the bill provided the collection agency agrees not to report it. Problem solved. This is much easier than trying to negotiate a pay-for-delete. You would, of course, need to get this agreement in writing before sending the bill collector a dime. Otherwise, you can pretty much guess what will happen. You'll be out $200 and the collection agency will report your debt as "paid" to the credit bureaus. Paid collections hurt your score just as much as unpaid ones. 

If the collection agency's trade line is already on your credit reports, its time to call the doctor's office. Your primary care physician knows your address and telephone number but not only did the office not bill you, they also (apparently) didn't provide the collection agency with your contact information. Sounds fishy, doesn't it? I'd call the office, ask to be transferred to the person who handles billing and explain very politely what happened. 

Ask why you weren't billed and make it clear that you'd be more than happy to pay this debt, but that because of negligence on the part of either the doctor's office or the collection agency or both, you're now stuck with an undeserved collection on your credit report for seven years. The billing person will likely tell you there is nothing they can do and that you'll have to take it up with the CA. Be prepared for this and inform this individual that only the original creditor can recall the account and there was a clear error here and you need your account recalled. 

If the billing person doesn't help you, talk to the office manager. Talk to the nurse. Talk to anyone you can who will listen. If no one will help, write the doctor a letter. Explain what happened and how distraught you are. Tell him that you've always paid on time and now your credit is damaged due to circumstances completely beyond your control and ask for help. You'd be surprised how well people respond when you use the word "help." Seriously. 

A few years ago my daughter ended up in the hospital while on an out-of-state camping trip. She was transferred to two different hospitals, saw numerous specialists and had two different surgeries in different cities as she was being transported home. As you can probably guess, I got roughly a billion different bills for different services. And then the inevitable happened: I got a threatening collection letter even though I paid every bill in full as soon as it arrived. 

I did everything I've told you to do. In the end, the problem was fixed and the doctor actually called me at home to apologize. He explained that his office uses a third-party billing agency. This billing agency frequently  sent threatening letters for debts that weren't even late. He told me that this has happened with the past few billing agencies he contracted with and that the problem was widespread. He had every intention of trying out yet another agency, but my point here is this: if the collection agency is sloppy and unethical, the doctor probably knows about it and will be willing to help you out. 

Other specialists in this field may disagree with me on this, but I see no need to dispute this debt with the credit bureaus when what you're dealing with is a genuine mistake that can and should be rectified by the creditor. Disputes should be a last resort because, once the collection agency verifies the debt's validity  the credit bureaus can ignore any other disputes on that particular account. So tread carefully and work this out with the doctor's office directly – not the collector. 

Best of luck,

Friday, March 1, 2013

Reader Question: Which is Worse for Credit Score, Settlement or Bankruptcy?

Hello Lee!

I, like all of the people on here, am stuck in a bad situation and I don't know what to do. I went thru a nasty divorce that lasted 3.5 years and in that time I was a single mom trying to survive. All money I made went to lawyers, a roof over our heads and food. I had to take loans out and credit cards to just buy groceries. I'm slowly (I mean SLOWLY!) getting back on my feet. I'm looking at $27,00.00 in debt. I thought about filing bankrupt papers but wanted to look into setteling my debts with the CA. Which would kill my credit more you think? It literally has been years since I paid anything. I think last year I paid $50.00 to each company (4 of them) to get them to stop harrassing me on the phone. You seem to give amazing advice! Please Help!!!



Unfortunately, $27,000 is a large enough amount that a collection agency wouldn't hesitate to sue. I'm hoping this $27,000 is your total debt and not your debt to a single creditor. That might make this situation easier to manage. 

You made a mistake by paying them anything. Each time you send them money, that resets the statute of limitations for a lawsuit. You don't mention which state you're in, but the SOL ranges from 4-6 years in most states. 

Your position to settle depends on your ability to pay. For example, if you have a job, money in the bank or own property, such as a home or car, the collection agency can sue you and force you to pay the full amount by garnishing your wages, emptying your bank accounts and seizing and selling your property. When you contact a CA you haven't heard from or spoken with in a long time and propose a settlement, all you're basically saying is "I have money now! Come and get me!" So, of course, the CA begins to rabidly pursue you (usually for the full balance). 

The older an account gets, the less likely it is that the CA will get paid and the more likely a CA is to accept a settlement. They'll generally send you a settlement proposal in the mail. Once you know the company is ready to settle, you can then call the company and negotiate back and forth. Negotiate up, not down. For example, name a lower number than you can afford to pay and let the collector bring your price up. Don't start from the collector's settlement offer and start negotiating down. This is a cheap psychological trick, but it often works. It makes the collector feel that he's "won" by getting you to pay significantly more than you offered while simultaneously helping you get a lower settlement than you would have gotten by negotiating down from their offer. 

Settling with the original creditor on a debt will decimate your credit, that much is true. Settling with a collection agency, however, won't. You see, the collection account on your report is as bad as it can get. It can't get any worse. So whether its paid, unpaid or settled, its still a collection account and it still affects your credit rating exactly the same. In general, however, bankruptcy is always worse for your credit report than settling with anyone. And if you file Chapter 13, you have to pay those debts back anyway – sometimes in their entirety.

Now, since you mentioned bankruptcy, here's where things get interesting. If you end up filing for bankruptcy, the collection agencies get NOTHING and they can't sell the debt either. If and when you call for a settlement, tell the collector you speak with that you are filing for bankruptcy if you can't get these debts taken care of. The word "bankruptcy" will usually make creditors much easier to work with. After all, you've got them over a barrel. They either work with you and give you a reasonable repayment option or they get nothing. 

If bankruptcy is really an option, I wouldn't make a single payment to any of these creditors until you've got settlement agreements IN WRITING from each of them. The last thing you need is to settle with several of them only to have the last sue you and force you into bankruptcy. If you end up filing bankruptcy anyway, paying the first few settlements was nothing more than a big waste of money. It's all or nothing here. 

Oh, and if you're outside of the SOL in your state for any of these debts, feel free to twiddle your fingers until they go away. They can't sue you. You can send a written request that they stop telephoning you and they have to adhere to it. It's just as effective as sending a payment and, if the SOL has expired, a whole heck of a lot safer. If the SOL hasn't expired, let them call. Prohibiting contact with an SOL that's still in effect is just begging for a lawsuit. 

If you have any other questions, feel free to ask. 

Best of luck to you,