Debt settlement may be an alternative to bankruptcy, BUT!
If you have high credit card debt one of the bellow debt settlement options may work for you. However if you do not believe there is a way for you to pay back within one year, filing bankruptcy is a legal and most expedient way to resolve your financial predicament. One year after bankruptcy you would have re-established your credit score to the current level you are at this time if you are already behind on your payments. I am a Bankruptcy attorney in Los Angeles and can help you decide what is the right option for you. After reading the bellow, if you have questions, do not hesitate to contact me.
1) Try calling your creditors and see if they will arrange a payment plan. Suggest to them, closing the account, reducing the interest rate and making reasonable payments on a monthly basis. Offering them $10 a month or “whatever I can” will not work, your figures must be reasonable given your circumstances and the balance that you owe.
2) Try consolidating your debt together with a low interest rate debt that you may be able to get on another credit card such as a balance transfer. But of-course to be able to have this option, your credit should still be intact, in other words, you can see the difficulties you are about to have and are preparing yourself in advance. Now here you may also be able to consolidate with a home equity line, but you must be very careful. In doing so, you are converting the nature of your debt from unsecured to secured debt that attaches to your house. (generally not advisable unless you are 95% sure you will be able to pay back in full and in a relatively short period of time)
3) Try debt management firms that might be able reduce the interest on each card and manage the payment to these cards. A reputable firm will charge you about $35 per month for their service. You must be very careful, there are many “companies” that charge you $6,000.00 before you realize that all the payments you are initially making is going to pay their “fees”. If you can not find a reputable firm that charges you monthly, try doing it yourself. That is try #1 above.
4) Try debt settlement. If you are behind about 6 months, your credit card debt is sold to a collection agency. They typically will offer 30% – 40% of the amount you owe to settle. However, often these collection agencies tag high interest and penalties and within a span of 6 months your original balance can rise substantially more that it was. Sometimes you end up with more debt than what the credit limit was on the original card. When negotiating with collection agencies, stick to what you think the balance that you owe and start offering them a percentage from there. Make sure you do not give any personal information to them like who you work for or your checking account number and bank information.
5) Finally there are bankruptcy options available to you. In certain circumstances its the best option for you and your creditor. If you do not believe there is a way to pay back within one year, filing bankruptcy is a legal and most expedient way to resolve your financial predicament. This also will get the creditor to realize that they will not recover and move on without spending any more time, money and effort on this debt. You can read more about bankruptcy chapter 7 and chapter 13 at our website www.LosAngelesBKLaw.com or consult an attorney in your area.