YOUR credit card payments are past due. You’re confused and don’t know what to do. The bill collectors are calling you non-stop and writing you threatening letters. What do you do? Should you just file bankruptcy? Or are there other options?
Most people are unaware that credit card companies will negotiate with you if they believe that it is in their best interest to do so. Many times, it is possible to negotiate a significant reduction and save yourself thousands of dollars. How does debt settlement work?
If you are delinquent in payments, perhaps you are afraid of what creditors may do next. Maybe bill collectors are calling you all day long. You might get nervous every time someone knocks on your door because it could be someone handing you a summons for a lawsuit. Or it may be that your accounts are already in collections, a lawsuit has been filed or even worse, like a judgment or a wage garnishment may already be pending. Maybe you’ve even tried calling debt collectors at one point and begged them for some kind of payment plan that you can afford and they said NO. If a debt collector tells you that it is “their policy not to settle debts,” don’t believe it.
If you are behind in payments, this is when debt settlement may actually be a good idea especially if you are trying to avoid filing for bankruptcy. This doesn’t work in all situations but there are certainly a lot of scenarios 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 30-60 cents of the original debt amount.
What type of debt 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, personal loans, department store cards, auto repossession deficiencies, etc.
Debt settlement works best in situations where the debtor has the ability to produce enough cash to settle for 30-60% of the amount owed. The reason is that creditors are often only willing to settle for less than full amount only if you pay them in a lump sum as opposed to paying in installments. If you are a homeowner, you may be able to refinance and use your home equity for debt settlement.
If you do not own a home, perhaps you can sell personal property that you don’t need, borrow cash from a relative or maybe take money out of your 401K plan. If, on the other hand, you don’t have a lot of cash available, do not lose hope. So long as you are employed or have some source of income, creditors may still agree to monthly payments over a period of time although in this scenario, creditors will not be as flexible in reducing the original debt amount.
Filing bankruptcy may make more sense than debt settlement in certain situations where property is 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 that 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- These are your usual options in dealing with debt problems. If you are currently in financial hot water and don’t know what to do, seek legal help and find out what is appropriate for your situation.
For a free consultation and debt analysis, call Toll-Free 1-866-477-7772.
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NOTE: Due to COVID-19 concerns, I am offering free consultations BY PHONE OR VIDEO to anyone who needs help in dealing with their debt problems.
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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 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.
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