Bankruptcy or settle with credit companies and debt collectors?
I currently have around $18,000 in debt, $10,000 of which is from credit cards, $8,000 from an auto loan (The car was repo-ed and this is the remainder balance I owe after auction). I also have $17,000 in student loans. I have been unable to pay on my credit cards for the past year and a half, so the interest rates are through the roof and my credit score is extremely horrible. Would it be better for me to file for bankruptcy at this point? or try to negotiate a settlement payment for my debts and try to rebuild my credit?
I’d say try to negotiate with them; you will learn better money management in the process of working with them. Also, doing this will probably look better on your credit report than will a bankruptcy.
However, I’ve not been in your position, so if you get better advice take it!
once you go bankrupt, you lose your ability to go bankrupt again for 7 years. then, the creditors see this as “you HAVE to pay, by law, no matter what,” and they’ll sue you in civil court for what you owe. then, good ‘ol Uncle Sam comes in and garnishes your wages until all your debts are paid.
bankruptcy is for those who are too dumb to grasp the concept that you’re just borrowing money, it basically is a legal way to admit that you’re too stupid to pay your own bills, and the government comes and pays them for you.
but from YOUR paycheck.
I’m not an expert with bankruptcy law but because of President Bush, you are not completely off the hook. Your best bet is to work with the creditors/debt collectors (also, I have no experience with them either, so they could be less willing to help you). Speak to a non-profit financial adviser.
With credit card balances that high, I would recommend debt settlement as opposed to bankruptcy. Bankruptcy laws have changed and erasing credit card debt is no longer an option. Typically you would be required to go into a repayment bankruptcy which would require repayment of the debt. (100% in many cases.) Not to mention out of pocket fees.
With debt settlement your debts are settled with your creditors. Typically debts are settled for between 50-75% of what you owe and the monthly payment is usually ½ of what your normal monthly minimum payments are. There should not be any out of pocket costs to enroll in a good debt settlement program.
I offer free consulting services for people in this situation. I educate them about their options and analyze their specific circumstances and I can refer you to a reputable company.
If you would like to discuss your situation please feel free to contact me through my website.
When compared to bankruptcy, debt settlement has only minimal effect on your credit. A bankruptcy will be listed and hold your credit score down for 10 years, while the delinquent payments incurred while enrolled a Debt Settlement program will be there for only 7 years (and in some instance, even less). So at a minimum, your credit report will be cleared at least three years earlier when using Debt Settlement company as opposed to bankruptcy.
Another important factor to remember is that a typical debt settlement program ultimately resolves your debts for much less than other debt relief options. And, unlike bankruptcy, you won’t have to sell your house or other assets in order to free yourself of your liabilities.
Also remember that there are several other debt help options out there besides Debt Settlement and Bankruptcy, such as Credit Counseling and Debt Consolidation Loans, and that each has their own upsides and downsides, so it is important to evaluate each carefully and examine how they fit into your overall needs and goals.
I would review a website like http://diylegalinfo.com/bankruptcy_Links.html before making any descisions
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