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Deep in Credit Card Debt – Should you file Bankruptcy?

When we encounter consumers with high credit debt, we remind them there are always alternatives to Bankruptcy. Too many consumers mistakenly view Bankruptcy as the only way to escape their debt. In many cases, Bankruptcy is not always the best solution. Several alternatives to Bankruptcy are listed below.

  • Consumer Credit Counseling
  • Consolidation Loan
  • Negotiate payment options with your creditors
  • Settle your debts for pennies on the dollar

1. Your first option should be a phone call to a Consumer Credit Counseling agency. Their financial advisers will take a look at your budget to see if you are a valid candidate for their program. If so, they will negotiate with your creditors to lower your interest rates. A typical credit counseling plan lasts 5 years.

2. Your next alternative is determined on your borrowing power. If you have cash available and/or can borrow a reasonable amount, you may want to look into a debt consolidation loan.

3. You can negotiate payment options with your creditors much easier if your accounts are past due. It does not make much sense, but that’s the way the financial system is currently structured. Contact your creditors and see if they can work with you to restructure your payments. Most often then not, they will work with you to bring your accounts up to date.

4. If your accounts are charged-off, or written off, you can easily negotiate a settlement for pennies on the dollar. Be firm in your negotiations with creditors and collection agencies to reach your affordable monetary range. Settlements of 50 cents on the dollar and lower are very common.

If all of the options mentioned are not on the table, only then you should consider Bankruptcy as an option. If you are approved for a Chapter 7 Bankruptcy, the slate will be wiped clean and a fresh start will be issued. Be aware of the ramifications that come with filing Bankruptcy. A consumer who filed Bankruptcy typically has to wait 2-3 years before having the ability of qualifying for a Mortgage. Bankruptcies also typically stay on your credit report from 7-10 years, unless there is a reporting error of course. We listed all of the options, what are you planning on doing?

For Consumer Credit Counseling check out Consumer Credit, they are not for profit and can work with you to establish payment arrangements with your creditors

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