Declaring that you’re bankrupt can have a dramatic impact on your credit score, confidence in our ability to manage your finances and on your financial stability. When you fall in debt, it is almost always a better option to repay your debt through the other alternatives rather than declaring bankruptcy as this stays in your credit report for the next 7-10 years. When the balance on your credit card grows out of control, you should look for some alternatives before surrendering to bankruptcy. Moreover the credit card companies would prefer getting back their money than surrendering it through bankruptcy. It is easy to work with the credit card companies and avoid bankruptcy as they usually remain cooperative when it comes to negotiating an alternative debt repayment option. Have a look at the steps to take in order to make a settlement offer with the credit card companies.
- Make a clear list of all your debt obligations: Before you take any step to negotiate with your debt, you should first make a clear list of all the debt obligations. Take a pen and paper and jot down all that you owe, the total principal amount, the total amount you’re paying as the interest rates and the due dates on which you are liable to repay the amount. If you’re late on your payments, you may also write down the total number of months you are late on the accounts.
- Determine your debt and income: Once you have jot down the total amount of debt that you owe, the next task for you is to determine your income. Here too you can make a list of all the income sources from which you derive your money in a particular month. You shouldn’t leave out a single source, even if they are from investment assets or any other source. Unless you know how much you will be able to pay back your creditors, you won’t ever be able to negotiate your debts.
- Call on your credit card companies: You can even call on your credit card companies and speak with someone who is worth speaking to. Tell him about the financial hardship that you’re going through so that he might know the reason behind the defaulted payments. Ask for a modified payment plan through which a certain portion of your debt amount will be waived off and then you can repay the remaining portion in easy and affordable monthly payments.
- Get the arrangement in writing: If the creditors agree to listen to you and they end up with an alternative repayment plan through which you can easily make payments, you should immediately start off with the repayment plan. If you get this entire arrangement plan in written, you can complete this process with ease. It will be easier to avoid any kind of discrepancies in the near future as you will have everything in written.
Therefore, if you’re wondering about settling your debts or filing bankruptcy, you should take into account the above mentioned ways in which you can settle your debts and avoid bankruptcy. Bankruptcy stays on your report for the next 7 years to 10 years and hence you should try your best to avoid it as much as possible.
About the Author: Shaun Spellman is an independent financial advisor and also an author who has written many articles on debt consolidation, debt management, debt relief, bankruptcy, credit management and on other finance related topics. In addition to that, he is closely working with the ‘debtconsolidationcare community’. If you like this article please follow us here.