|
|
Credit Card Debt Settlement Opposed To Bankruptcy In The United States - Which Is Best For You?
Are you wondering which is better - to work out a credit card debt settlement or to file for bankruptcy but are not at all sure which is the right one for you then you need to take a few things into consideration before you make any decision which is right for you at this time. Perhaps it feels the right thing to do is to file for bankruptcy and leave all the hassles of nasty phone calls and demanding letters well behind, but lets look at some facts here.
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!
Let us say that you have been unable to pay off your visa credit card for quite some time and the card company have now sold your debt to them to a debt collection agency. The collection agency will shortly be in touch with you, often firstly with a letter and then with a follow up phone call with demands for immediate payment.
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.
The credit card company will obviously receive a much-reduced amount to what is actually owed to them and the reason they are willing to accept this is that they compare this figure firstly to what they would get if you were to declare Chapter 13 bankruptcy - they would get less. If you were to declare Chapter 7 however, they would get absolutely nothing!
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.
Further, if you are to discontinue with the plan at any stage your case will be dismissed and you will be right back at the beginning once again, having paid all those added fees, which you lose anyhow.
Therefore, unless your debt is very much insurmountable, it most certainly makes very good sense to focus upon the debt settlement route.
|
 |
Please Rate: |
|
Rating: |
 Processing ... |
(Average: Not rated) |
| Views: | 15 | |
|
| More Articles from Debt Consolidation | | |
| Top Articles in Debt Consolidation | | |
|
