When you’re suffering under the weight of credit card debt, medical bills or other bills it’s impossible to see clearly. Everywhere you turn, someone’s pushing their solution on you – and each one sounds too good to be true.
The truth is, some solutions work for some people but not others. But without an unbiased resource, chances are pretty good that you’ll make a choice about your credit card debt and other bills that doesn’t fit your needs.
Make a bad decision and you’re looking at far more difficulties.
The Collections Process
When you fall behind on your payments for your credit card debt, here’s how the collection process works:
- In-house collections efforts by the creditor;
- charge-off of the debt at 180 days, at which time the debt is usually sold to a third-party debt buyer;
- collections efforts – including telephone phone calls and letters;
- lawsuit filed against you by the entity that purchased your debt;
- judgment taken against you for the debt plus any interest, legal fees and costs; and
- execution on the judgment – including wage garnishment and bank account freezes.
Solutions To Your Personal Debt Problems
Do Nothing: There are times, though limited, that call for you to do nothing at all and allow collection efforts to continue. Credit card debt will increase due to interest and other fees, but if this is a temporary setback then it may be worth your while to see how things work themselves out.
Credit Counseling: Credit counseling involves hiring a company to review your budget and negotiate with your creditors to reduce interest rates and late fees. The credit counseling agency will then create a debt management plan, collect your monthly payments, and divide the money among your creditors. Credit counseling can be valuable to some people depending on the type of debt they have, but is usually limited to credit card debt only.
Debt Settlement: Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, involves you negotiating with your creditors to agree on a reduced balance for payment of your debts. Debt settlement can be done without a lawyer, but lots of people use companies to negotiate on their behalf. Debt settlement may result in tax liability as well as credit report issues, and fly-by-night companies have popped up in recent years. If you’re looking at debt settlement, get all the facts and check out your service provider before committing to the process.
Bankruptcy: Bankruptcy is a legal process that involves resolving your bill problems under the supervision of the federal court system. This may include wiping out some debts, reorganizing your payments on others, and either selling or keeping property. It all depends on your goals, your income and your monthly expenses. As with any other solution, bankruptcy is not for everyone. And though you can file for bankruptcy without a lawyer, it’s a large and confusing enough process that you should consider speaking with an attorney.
The Best Way To Find The Right Solution For You
You’ll never know which option is right for you until you talk with someone who understands the pros and cons of all of them.
Take the first step in getting answers to your questions by setting up a free, no-obligation phone consultation. You can also give us a call at 866-787-8078 during normal business hours.