Debt negotiation

Although many people don’t, if you do happen to have a little cash to throw at your debt, you can try debt negotiation. There are a variety of debt negotiation companies on the market however the best route is to contact an attorney who specializes in negotiating with creditors. Negotiation involves having your representative contact your creditors to negotiate a one or two time payment to eliminate the debt. Attorneys who are good at this can sometimes get loans reduced to about half of what was originally owed. Your circumstances must fit certain criteria to do this such as accounts that are severely delinquent and cash available to partially pay off an account. Even though this can be a very effective method for eliminating debt, there are some drawbacks. Accounts paid off in this manner are reported as paid for less than owed. Some companies may also not be open to negotiation regardless of how good your attorney is.

Debt counseling and consolidation

If your accounts are still in relatively good standing such as none that are more than 90 days past due, credit card counseling or consolidation. Companies that offer these services are generally very reputable. If you don’t want to spend time checking companies out you might try and ask friends or acquaintances if they have used one before. Some companies provide both of these services at the same time. Consolidation involves grouping all of your accounts into a single payment which is easier to manage. This can be done in two different ways. Some companies will offer to give borrowers a new loan to pay off all their accounts. The borrower will then make one monthly payment on the new loan instead of multiple payments to different creditors. This makes managing the debt much easier and can also lower the interest rate on all accounts overall.

Another method that some companies use is to deal with your creditors directly and set up a budget and payment plan. Individuals make one monthly payment to the consolidation company which in turn distributes it equally to all the individual’s creditors. The counseling part comes in when the company helps the borrower draw up a monthly budget and can give suggestions or education on money management. The overall idea with either method is to make loans more manageable so that they can quickly be paid off.

In closing, there are other options to eliminate credit card debt without bankruptcy. Even if you have accounts that are delinquent there are still some options before going through the courts to get your debts paid off. Bankruptcy is not an easy process and there are typically more drawbacks than benefits to using the process. It will also stay on a credit report for a very long time during which is may be difficult if not impossible to obtain new credit.

First Step
Be absolutely sure that there is no other option for you to resolve your financial crisis. To file for bankruptcy is to place a very black mark on your financial record that lingers there for a very long time. It is far better to pay back the debts you have incurred. To do so helps you to gain better control of your life circumstances especially in the area of self esteem. It also helps you to reconcile any ill feelings you might have over the circumstances that brought you to the crisis.

Another thing you should do right at the beginning is to not be embarrassed. For a majority of families that find themselves in a major financial crisis, it has been brought on by circumstances outside of their control. Whether it is through accident, plant closings, health issues, domestic struggles, the nation’s economic conditions, etc., you can breathe a sigh of relief by knowing that the country you live in has established a means for private citizens to get a new start. Bankruptcy laws go back to the year 1800. Prior to that people could easily find themselves thrown into debtor prisons where there was no help available at all. Thank God for the work done by our fore fathers in establishing a means for dealing with overpowering debt.

Consider two basic options – Chapter Seven and Chapter Thirteen. Chapter Seven allows a person to reduce or even eliminate most of his debt, however he may have to give up ownership of major assets with the exception of some personal possessions and the house he lives in. Chapter Thirteen permits a person to make smaller payments to those whom he owes, but he is permitted to keep all assets, period.

Second Step
Meet with a professional, whether a financial consultant or lawyer who specializes in bankruptcy, and ask hard questions to get some understanding of the system and how your situation fits in it. After you get all your financial information gathered up, you can begin the preparation of the bankruptcy documents with your attorney. Don’t try to do this yourself, for there are federal and local regulations that you might not be aware of that your attorney is far wiser in understanding just what is best for you. Remember this one fact – bankruptcy documents represent a small mountain of at least forty to over one hundred pages of information!

Next you will file the necessary documents with the bankruptcy court. The court will send notice to your creditors of your filing and order them to stop any collection activity at that point.

Third Step
You must attend the creditors’ meeting. There is no excuse for you, you are required to be there. It will only last a few minutes and many times the creditors will not be there. So, don’t miss this meeting.

Fourth Step
If you have filed under Chapter Seven, then there is a determination by the Bankruptcy Trustee as to which assets may be sold for the repayment to the creditors. The sale will take place and the proceeds are distributed properly among your creditors.

If you have filed under Chapter Thirteen, the court will work out with you a repayment plan for you to work through your debts over a period of time and to satisfy your creditors. This must meet the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) means test.

Finally you are discharged if you have filed a simple bankruptcy. The discharge should take place around 90 days after the creditors’ meeting. The discharge means that you have satisfied everything the bankruptcy rules required and all your former debts are erased or that you have finished the entire repayment plan established in the Chapter Thirteen filing.

You now are free to begin again and establish a surer financial plan without fears of any past encumbrances from old debts. You will have survived the ordeal of filing for bankruptcy and hopefully are now wiser and financially healthier as a result.