Sorry to hear about your plight. I"ve been away for a while hopelessly busy and so unable to respond to very much. I still don't have time to answer all your questions, but a couple of things should be said.

1. It would be very counterproductive for you to declare bankruptcy.

2. The lawyer was bluffing you. If your last payment was in 2005, the debt is stats barred and will disappear off your credit reports in 20011. If they really were able to sue you now and obtain a judgment, it would stay on your credit report 6 years from when it was rendered, not when you pay it off.

3. The process of writ execution is complicated and if you haven't been successfully sued, there's no point of going into it. But one thing I would STRONGLY advise: someone in your position NOT hide from creditors; it's better they know where you are. Certainly, a moot point right now as they must know where you live since you still have active trade lines going. What one creditor knows, they all know.

For completeness, you should make sure that no one has thus far obtained a default Small Claims Court judgment against you. Unlikely, but the sneaky buggers do it all the time. Contact the clerk of the Small Claims Court in your jurisdiction and give them your name to make sure. Those judgments sit around for 20 years and the writs to enforce them last 6 years. They can even be renewed AFTER they expire. To make matters worse, creditors sometimes file them BEFORE you manage to reaccumulate any assets (i.e., automobiles, bank accounts) or employment income or real property as a pre-emptive measure. These enforcement documents of seizure (or writs) are transferable as to the type of things that can be seized and also to the jurisdiction you reside in. Thus, if a judgment is obtained against you without your knowledge, it could sit around for years gaining huge amounts of interest. When you get back on your feet, that's when they usually strike. It's the stuff you don't know about that you have to be concerned with.

In contrast, given your situation, if any of your creditors had taken you to Small Claims Court and you were there to respond, you would have had little to worry about. Of course, they knew this already and that's why they didn't.

4. Later on, if you want to settle the debt, you can offer the original collection agencies or the scavengers who have purchased it from them, some percentage of the original amount of $2500. Forget the interest thing.

Maybe call up the old crowd and ask them if they want to get together at Shoeless Joe's to reminisce.

Ray

If you're earning around the poverty line, why not try to settle the debt with your creditors. If you can't pay them, then you need to get out of the debt some how... it's either that or bankruptcy.

It seems odd that a lawyer sends you a letter and then you don't hear anything. The letter I would imagine is a scare tactic and if they are really going to sue you they would serve you will court papers for small claims. In order to garnish your wages they have to obtain a judgement in court. I call BS. If the debt occured in 2005 in Ontario I have read here on the forum that there is a limitations period to take court action of 2 years. But someone else can elaborate on that as I'm not from Ontario.
As for fixing your credit...
The R-9's will stay on your credit bureau for a maximum of 6 years from the last day of payment. Even if you pay them they are a negative mark towards your credit score. Only time will take those off.
I would keep your Visa in good standing and wait it out.

I'm so glad I found this site and I want to commend you all on being so helpful and informative. I hope someone can help me.
In 2004 I took out a loan with a high risk lender for $2500, and the company that loaned me the money was the same company I worked for at the time. 2 weeks after signing the loan agreement I was laid off, and the company refused to work with me for debt repayment or to rewrite the loan based on my new lower income. (The same people who repeatedly denied my request for a rewrite and later hounded me with rude collection calls were the same people I used to have lunch with, if that helps you understand how I feel about this!) The last payment I made on the account was right around this time 3 years ago, in early 2005. The debt has now escalated to nearly $7500, and in January this year I received a letter from an attorney, by regular mail, that I was being sued for the balance. Dealing with a severe illness at the time, I couldn't respond. I have not heard a peep from the lawyer since that single letter.
Otherwise, my credit is quite poor. Dealing with a severe illness for a long period, most of my accounts have gone into collections. I'm back to work soon so I can get them paid off in a few months, but the only revolving credit I have left is a Visa with a $500 limit, and I'm going to have 6 or 7 other balances, up to the $500 mark, as R9's paid in full, so clearly my credit is going to be shot for quite a long time becase of this.

But back to the bigger loan....I usually earn right around the poverty line, so dealing with a bill this big will take me years to pay off. If I understand correctly, negatives stay on your credit report for 6 years since your last payment, so 3 years from now I can finally be paying out this balance and have it on my report another 6 years after that, or I can ignore it and have it go away in 3 years. Am I correct? As far as being sued, how can they garnish your wages if they can't find you? I have no assets to take so there's no worry there. Will the balance still disappear from my credit report if I have been sued? And is there a way to find out if I have been sued without contacting the attorney directly? Do they have to notify you if they get a judgement against you, or is this something that could haunt me for years?
Would you suggest I attempt to pay the balance in full over the next few years, should I attempt to settle the balance, or forget about it altogether? What will get my credit score reasonable the fastest, considering my one single credit card and several bad debts which are recent?
Thanks if anyone can help.