Asian Journal- The Filipino-American Community Newspaper

MOST people are unaware that credit card companies will negotiate with you if they believe that it is in their best interests to do so. Many times you can negotiate a reduction of your interest rate and elimination of late charges and annual membership fees. When you are several months behind in payments, they may even agree to take less than what you owe them. The fact that the account is already in collections and/or a lawsuit has been filed doesn’t even matter.

Debt settlement may be a good idea if bankruptcy is not a good option in your situation. Certainly there are situations where bankruptcy may be avoided and debts can be settled using the least amount of money possible. It is a known fact in the collection business that as time goes on, the ability to collect on a debt diminishes. Thus, the longer your accounts have been in collections, the better your chance of settling your debts for a significantly reduced amount. For example, it is my experience that creditors will settle for about 40-60 cents on the dollar.

What debts can be negotiated? Actually, debt settlement is possible not only for credit cards but for almost all types of debts. The list includes medical bills, bounced checks, department store cards, auto repossession deficiencies, etc.

Debt settlement works best in situations where the debtor has sufficient settlement funds, typically 40-60 percent of the total debts owed. In some cases, it may be possible to borrow the funds from a relative, a 401K plan or perhaps sell certain assets in order to produce the cash needed. If, on the other hand, cash is not immediately available, do not lose hope. If you are employed or have some source of income, it may be possible to raise the money that you need although it may take time. Creditors may still agree to some type of payment plan where you can make interest-free payments over a period of time as opposed to paying a lump-sum settlement. CAUTION: Beware of debt settlement companies who promise to protect you 100 percent from creditors while you are enrolled in their debt settlement program! The truth is that these companies cannot legally protect you from lawsuits, judgments and wage garnishments if creditors refuse settlement and decide to sue. If you are in a type of program where you pay into a trust account every month to save funds needed for settlement, be aware that it may take several years before all your debts are settled. More often than not, one or a few creditors will not wait that long. They will take legal action and take you to court before a settlement is reached. If that happens, you may end up filing for bankruptcy anyway after having paid thousands of dollars to the debt settlement company. This can be a terrible waste of time and money.

If no other viable solutions exist, filing bankruptcy may make more sense than debt settlement especially where assets are exempt and beyond the reach of the bankruptcy trustee and creditors. If you are eligible, Chapter 7 bankruptcy allows you to wipe out debts you can no longer afford to pay so that you can start fresh immediately. Chapter 13 allows you to consolidate debts into one affordable monthly payment so you are not stressing out every month with not having enough income to pay living expenses and debts at the same time.

Debt settlement, Chapter 7 or Chapter 13- are the usual options. If you are experiencing debt problems and don’t know what to do, seek legal help and find out what is appropriate for your situation. For a free consultation, call toll-free 1 (866) 477-7772. Let us evaluate your situation and recommend possible options. We have offices in Glendale, Cerritos and West Covina.

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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.

( www.asianjournal.com )

( Published on July 8, 2009 in Asian Journal Los Angeles p. B3 )