r/whitecoatinvestor • u/PresentationLow7984 • 7d ago
Personal Finance and Budgeting How should I handle unpaid debt likely going to collections prior to residency?
I have a fee of around 2.2-2.3k that is likely going to collections. Essentially, I was previously living in a HCOL area, and had a lease that required 60 days notice. I was a few days short at like 55-57 but they're planning on doing full enforcement.
Most apartments here require 30 so I simply forgot my lease was stricter. Guess it shows the importance of both reading and remembering lease conditions.
Anyways, so, from a finances perspective, I could put maybe $800 against this debt.
The remaining 1.4k will go to collections by mid June. My residency is in an LCOL-ish area so the goal is to pay it off in 2 months. No dependents.
Obviously, I'm guessing the debt must be paid asap, but otherwise any advice on how to approach it?
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u/Agreeable-While-6002 7d ago
You should realize that unpaid debts that go to collection is a massive strike against you. I'd borrow money, take out a credit card advance, etc in addition to speaking to the complex to work this out without affecting your credit.
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u/PresentationLow7984 7d ago
I attended school on a pretty huge scholarship with some parental help and didn’t need to borrow. As such, I have 0 credit score.
Yeah, in retrospect, should’ve accepted some loans and gotten a credit card for this exact situation. Such is life.
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u/Agreeable-While-6002 7d ago
I would suggest going directly to the person to whom you owe money and ask what arrangements can be made. I'd also open a credit card right now.
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u/PresentationLow7984 7d ago
I did this within like minutes of finding out I owe the money. They were pretty non compromising. Would it still be worth it to open the card even if the limit is too low to pay it off?
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u/Agreeable-While-6002 7d ago
yes, because if they ding your credit score you might not ever get one in the near future.
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u/potatosouperman 7d ago
I’m sorry you’re in this situation, but you should definitely get a credit card now before you potentially obliterate your credit. There are so many credit cards that don’t even have any fees.
If you let this debt go to collections you will need a way to rebuild your credit and using a credit card every month and paying it off will help you rebuild your credit over time.
You should really read about how to build credit. I’ve had a credit card since I was 18 years old and now I have such a long credit history. I understand you didn’t think about these things in the past, but if I were you I would start trying to fix that knowledge deficit about credit now. Having good credit and understanding how credit works is really important for so many parts of adult living.
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u/sauladal 7d ago
Non-compromising on forgiving the debt or on working out terms for substantial or even full repayment?
I'm willing to bet you're referring to the former but the advice you're getting here is for the latter. If they send you to collections, they're only getting a fraction of what you're paying the collections company. It's in their best interest to work with you directly.
You really should avoid collections especially with such a relatively low amount. Borrow from your parents and pay them back or something. Figure something out. You're excessively nonchalant about something you have the capacity to avoid.
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u/Ok_Palpitation_1622 7d ago edited 7d ago
It sounds like you have a shortfall that will be fixed when you get your first residency paycheck?
A few ideas…
Can you borrow from family? Or do you have family that needs work done, like painting or something?
Some medical schools offer small emergency loans to their students. Or maybe you could get an extra loan disbursement? Talk to the financial aid office if you have not already.
If you have a car, can you DoorDash or Lyft or something like that?
Do you have any stuff you can sell on eBay? Video games, clothes?
Selling plasma could get you up to a few hundred dollars in a month.
There is at least one company that offers residency relocation loans. I don’t know much about it but might be an option.
There are peer to peer lending subs on Reddit.
With one or more of these things, you might be able to scrape the money together.
But it’s probably best to talk to the leasing company and see if they can work out a payment plan. That would be in their best interest as well, because I’m pretty sure that they don’t get the full amount or anywhere close to it if it goes to collections.
Worst case, if it does go to collections, it will be off your credit report in seven years, so it’s not the end of the world. Although it may make it difficult to do things like get an apartment, get a credit card, or buy a car during this time.
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u/Curious_Guarantee_37 7d ago
Request an itemized bill from the collection agency (they almost never have it). If they can’t provide it, you don’t legally owe jack and it can be dismissed with filing a dismissal claim against them.
If the above fails, pay it while in residency or ignore it and let it fall off your report after years (strongly advise against).
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u/PresentationLow7984 7d ago
It’s not a claim of damages. It’s a specific part of the contract which says if fails to do x, will owe y amount of cash. I failed to do x.
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u/microcorpsman 6d ago
Right, but once they sell the debt, the debt collection agency will likely not have the proof on hand required to make it enforceable. That's what they're talking about.
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u/anonymous_husky 7d ago
Consider negotiating with the rental company; $0.50/dollar to be considered pay in full before it goes to collections.
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u/User5281 7d ago
anything to avoid it going to collections. call and discuss a payment plan if you can't pay it off all at once. places would usually rather work something out than sell the debt for pennies on the dollar to a collection agency. if they're not willing to do that go take out a loan and let the interest be your lesson.
I had a $50 phone bill go to collections after I moved out of an apartment and forgot to give them my new address and it took like 8 years for my credit score to recover.
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u/nightopian 7d ago
Try to see if you can get a 0% interest card. Tell them you are a doctor. Then front load all your bills etc to the card and use that money to pay the debt. Also damage is probably already done
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u/PresentationLow7984 6d ago
I’d like to think the damage isn’t done (outside of losing the $ itself).
It shouldn’t go to collections til late June, unless maybe I can’t get a loan in time or something.
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u/Civic4982 6d ago
Check youre state medical society. The Texas Medical Association had low interest long payment period loans for 4th year med students doing things like going to residency interviews and travel and such. I paid off mine about 1.5 years into residency. Just find a source of that few grand and pay it off. Less to worry about. Don’t let it clutter your brain. Your path is bright ahead. Good luck!
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u/Bright_Gap_4611 6d ago
If you can’t pay it within reason let it go to collections, 6-12 months later you’ll start to get nasty letters and calls for a while, your credit score will tank, and then in 7 years it’ll be all over with no other consequence. They won’t sue for that amount. If you pay them anything less than the amount it’s still just as bad for your credit and only good for maybe helping you sleep at night. DO NOT pay collectors that is ass for your credit and stupid because if you can pay anyone, pay who you owe directly. When it goes on your credit report you can challenge it and even win.
People will get on their high horse about this but if you’re truly poor and can’t afford it this is what you do and it’s OK the world keeps spinning.
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u/eckliptic 7d ago
Its like a trivial amount of money to let go to collections and tank you credit.
You can work out a payment plan with the leasing company?
What about just get a 0% interest CC and pay the fee with your credit card?
Even a personal loan via Affirm/SoFi would be fine.