Credit Card Debt Settlement Opposed To Bankruptcy In The United States - Which Is Best For You?
If you are in a dilemma about whether to file for bankruptcy or work out credit card debt settlement then you need to know a number of things to come to the final decision which is best for you.
It may seem obvious to file for bankruptcy and get all the hassle and misery over and done with but before you do lets analyse a few facts.
Yes that's a fact, they want their money and they want it now, but what you will tend to find is that the amount they want is a much-reduced amount to the actual balance of the debt. You may not find that initially this is the case however, but in time they will try to negotiate with you upon the payment. If you do go ahead and pay them then the debt collection agency will receive - lets say around 60% of this amount as a commission, and the lending company will then receive the final 40% - a much reduced amount to what is actually owed to them.
However, when it does get to this stage in the affair, the debt collection agency will actually offer to accept a fair amount less than your actual debt currently stands at. So as an example let us say that the collection agency will receive, if you decide to pay them, a commission of 60% of the reduced debt offer. Following so far?
- Lets imagine you owe $20,000 to your credit card debts.
- The debt collection agency is asking for a full payment of only $10,000 from you to fully settle the debt.
- The collection agency thus gets 60% of this = $6,000.
- The original creditor receives the remaining 40% = $4,000.
The credit card company will obviously receive a much-reduced amount to what is actually owed to them and the reason they are willing to accept this is that they compare this figure firstly to what they would get if you were to declare Chapter 13 bankruptcy - they would get less. If you were to declare Chapter 7 however, they would get absolutely nothing!
So you can in time end up paying far less than you would do otherwise via debt settlement. Anything else to think about? Yes, actually. If you are to take on bankruptcy this will remain on your credit file for a total of 10 years, affecting your credit for that period of time. If you were to take on debt settlement your file would be "tainted" for 7 years only.
Further, if you are to discontinue with the plan at any stage your case will be dismissed and you will be right back at the beginning once again, having paid all those added fees, which you lose anyhow.
Thus it appears that unless your debt has now become entirely unmanageable - and I mean entirely out of control - you should always strongly consider a debt settlement plan before contemplating bankruptcy.
It may seem obvious to file for bankruptcy and get all the hassle and misery over and done with but before you do lets analyse a few facts.
Yes that's a fact, they want their money and they want it now, but what you will tend to find is that the amount they want is a much-reduced amount to the actual balance of the debt. You may not find that initially this is the case however, but in time they will try to negotiate with you upon the payment. If you do go ahead and pay them then the debt collection agency will receive - lets say around 60% of this amount as a commission, and the lending company will then receive the final 40% - a much reduced amount to what is actually owed to them.
However, when it does get to this stage in the affair, the debt collection agency will actually offer to accept a fair amount less than your actual debt currently stands at. So as an example let us say that the collection agency will receive, if you decide to pay them, a commission of 60% of the reduced debt offer. Following so far?
- Lets imagine you owe $20,000 to your credit card debts.
- The debt collection agency is asking for a full payment of only $10,000 from you to fully settle the debt.
- The collection agency thus gets 60% of this = $6,000.
- The original creditor receives the remaining 40% = $4,000.
The credit card company will obviously receive a much-reduced amount to what is actually owed to them and the reason they are willing to accept this is that they compare this figure firstly to what they would get if you were to declare Chapter 13 bankruptcy - they would get less. If you were to declare Chapter 7 however, they would get absolutely nothing!
So you can in time end up paying far less than you would do otherwise via debt settlement. Anything else to think about? Yes, actually. If you are to take on bankruptcy this will remain on your credit file for a total of 10 years, affecting your credit for that period of time. If you were to take on debt settlement your file would be "tainted" for 7 years only.
Further, if you are to discontinue with the plan at any stage your case will be dismissed and you will be right back at the beginning once again, having paid all those added fees, which you lose anyhow.
Thus it appears that unless your debt has now become entirely unmanageable - and I mean entirely out of control - you should always strongly consider a debt settlement plan before contemplating bankruptcy.
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