How to reduce or eliminate massive credit card debt

IF you’ve accumulated more credit card debt than you can handle, you may get this sick feeling in your stomach not knowing what to do about it. As a bankruptcy attorney, I find that this type of debt is the number one cause of financial problems that could lead to bankruptcy.

Not because you’re making minimum payments means that you have your debt “under control”. As I’m sure you’re already aware, the outrageous interest rates that the credit card companies usually charge insure that you’re going to be paying them for a very long time. For people with huge amounts of credit card debt, this could take decades or even a lifetime. Lots of hard-earned money down the toilet.

To get out of debt, you need to be pro-active. You can take forever to chip away very slowly by making only minimum payments but imagine how much money you’d be paying in interest and the cost to you in lost opportunities. This could be money going into to your retirement plan, your kids’ education or your savings account. Think about it.

Some people will take equity out of their home, their retirement plan or savings, etc. to avoid having to file bankruptcy. What happens most of the time, however, is that once the credit cards are paid off, it is too tempting to start using the credit cards again. And so only within a short period of time, the credit card balances are back up again. It takes a lot of discipline to refrain from doing that once you’ve paid off the balances. Unfortunately, from what I’ve seen in my practice, very few people have that kind of personal discipline and determination not to borrow again.

While debt settlement may be a good idea in some cases where bankruptcy is not, it will only be effective if you are able to pay cash immediately to creditors while negotiating a 40-70% reduction in most cases. Of course, a lot of people don’t have that amount of cash laying around but it is a possible alternative to bankruptcy when it makes more sense.

If you are tempted to hire a debt settlement company to solve your credit card problems, here’s my advice: DON’T!  The debt settlement industry is fraught with problems and companies taking advantage of consumers who don’t know or understand what they are signing up for. Hiring a debt settlement company doesn’t mean that creditors can no longer call you or continue collection actions. If the debt settlement company tells you otherwise, DO NOT believe them and run as fast as you can.  Enrolling in a debt settlement program will often make your debt problems worse and will only prolong your financial suffering. In the end, you may still end up filing bankruptcy.

I am not saying that bankruptcy is the best solution for every situation. But if you are thinking of consolidating your bills legally, Chapter 13 is a much better option because (a) You are legally protected while making payments- that means no collection calls, lawsuits, judgments, wage garnishments or bank levies, (b) In most cases you can cut your monthly payments by half or more, (c) All kinds of debts can be included including taxes, student loans, late mortgage payments, etc., and (d ) most importantly, YOU KNOW EXACTLY WHERE YOUR PAYMENTS ARE GOING EVERY SINGLE MONTH.

If you cannot afford a debt consolidation because you don’t have enough income, filing Chapter 7 can also be an option to just completely wipe out your credit card and other debts. Some people are afraid that once they file Chapter 7, they will automatically lose their home, their car, or other assets. This is not true. Most Chapter 7 cases are considered “no asset” cases. More than 99% of my clients keep everything that they have and lose nothing but their debts.

If you are trying to decide between bankruptcy or debt settlement, or if you have no idea as to what your available options might be, I can help you make the best decision for yourself and your family. I’ve helped more than 5,000 clients since 1998 and I can help you as well. For a free consultation with me, please call my office Toll-Free 1-866-477-7772. I have offices in Glendale, Cerritos and Valencia.

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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 thousands of 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. 

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