Options to Avoid Filing Bankruptcy
Having a bankruptcy on your record can be a black mark on your credit that follows you for years. It can be a beneficial process for some, for sure. But anyone who opts to puruse a bankrupcty needs to know the reprecusions of doing so. So are there any other routes you can take to avoid filing for bankruptcy?
There are a number of steps that you can take in order to avoid bankruptcy proceedings. If you find yourself falling behind on your credit card, car loan, and/or mortgage payments, you may want to take some immediate steps so as to avoid filing bankruptcy on these debts.
Negotiate Your Credit Card Debt
First, many people are overwhelmed by credit card debts. Never mind how you got yourself in over your head with credit card spending; the real issue for you now is to figure out how to get out of it. One easy step to take is to contact your credit card company and try to negotiate a lower interest rate. Credit card companies want to keep your business, because they are making money off of your high credit card balances.
Plus, credit card companies often charge very excessive interest rates on the money that you have “borrowed” from them by using your credit cards. Many – even most – credit card companies will lower your interest rate to some degree, if only you take the time to ask. When you are dealing with large amounts of debt, any cut in interest rates charged on your debts will help you in the long run, in that you won’t have to pay back as much as money as you would with a higher interest rate. It is not only easy to make a phone call and ask for an interest rate cut, but you are also likely to get it.
Use Credit Counseling
Next, you can enlist the assistance of a credit counseling organization, which can help you negotiate with your creditors in order to form a repayment plan that you can afford. Every state has non-profit debt counseling agencies that are in business to help you manage your debts. This is also a good solution when you don’t feel comfortable, or are simply fed up, with trying to deal with your creditors on your own. While you will have to pay back your debts in full, you will be able to avoid having a bankruptcy on your credit report, which may be very important to you.
It is also important to keep in mind that you don’t have to put up with certain types of creditor harassment. You cannot be thrown in jail for failing to pay your debts (except if your debt involves child support or alimony).
Your creditor does not have the right to call you at work if you don’t want to be contacted at work. The Fair Debt Collection Practices Act, which is a federal law, sets forth some very clear guidelines about what debt collectors can and cannot do in terms of collecting a debt. Thus, if you are being harassed by creditors, you should take some steps to educate yourself about what exactly these creditors can legally do to you for not paying your debt.
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