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.
Let us presume you have been struggling for some time to meet your credit card bills - even the minimum payments are a bit of a struggle now. Your credit card company have thus sold on your debt to a collection agency. Usually within days of this happening the collection agency will be in touch (or endeavor to do so) with you both by telephone and by letter. Its not at all pleasant either! They want their money and they want it now!
However, if not in the first instance, at least some way down the line, they will reduce the amount they are asking for, and very often it will be a very significant reduction of what was once the original debt. If you go ahead and pay, the debt collection agency will get, lets say, around 60% of the final payment you make, leaving just 40% of that for the original creditor/s.
You must be asking why the original creditor would be willing to accept such a small amount compared to what is owed, but before I answer that, lets have a quick look at some figures just to make all this clear.
Lets look at actual figures here. - Your original credit card debt stands at $15,000. - The debt collection agency offers to accept $8,000 as full payment from you. - The debt collection agency receives 60% of the $8,000 as commission. - The credit card company get 40% of the $8,000.
Furthermore, if you were to take the bankruptcy option this would stay on your credit file for a total of 10 years. If you were to take the debt settlement option then it will remain on your file for 7 years in total before you can start afresh.
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.
If you were to take the route of bankruptcy there are other fees to pay, namely: - attorney fees - a bankruptcy filing fee - court fees - a fee payable for a pre-filing debtor education course and you have to take the course too. And if you were to default on the bankruptcy terms and conditions you would have to start again from the beginning, and would at the same time lose all that money paid towards the above costs. A high price to pay for no results!
Therefore, unless your debt is very much insurmountable, it most certainly makes very good sense to focus upon the debt settlement route.
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You can learn more about credit card help and about a debt consolidation program to suit your needs.
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