Friday, February 27, 2015, AM | 2 Comments
The thing about debt of any kind, credit card debt included, is that it is like this gift that keeps on giving. The more debt you have the more debt you will have unless you have a plan to stay on top of it.
How? You probably have more than one credit card and on each of these you try to make the minimum payments but sometimes it is simply impossible so you attract penalty charges, which can be very heavy.
So we can understand how you would start thinking about filing for bankruptcy because you really can’t see any other way out.
It may seem like the only option but bankruptcy damages your credit score and credibility with many financial institutions and it may take years before you can receive a good deal on a loan, if they will even consider it. So before you go that route, let’s look at how else we can reduce your debt, okay?
Have you heard of credit card negotiations?
Some people call it the snowball and it has proven to be quite effecting in reducing credit card debt by up to 75%. You see, credit card companies are in the business of making money.
That is why they charge a particular interest rate on the card.
So what you and the credit card company have in common is that it want its money back and you want to get rid of the debt.
Filing for bankruptcy means that none of you will get what you want: the creditors won’t get their money back, and while you will be debt free, you will have a deplorable credit score that will take years to repair. This is why these companies are open to debt negotiations.
Here’s how you do it
You call the company up and state that as much as you would like to pay back your balance, you simply can’t and as such you are even considering bankruptcy.
Now, they won’t say, ‘Okay, you can pay whenever you like.’ You need to make them an offer.
For instance, offer to pay 25% of the debt in exchange for them halting the interest costs and closing the accounts.
Now, don’t assume that they will be glad to take this offer.
You need to convince the company that you are truly on the brink of bankruptcy and this is the last alternative you have before that.
It may take a lot of phone calls and explanations, which can be bad for your ego but it is worth the trouble.
Some people hire professional debt negotiators while others do it themselves but whichever way, debt negotiation is your best bet for eventually being debt free.
Plus, it doesn’t do any more damage to your credit score. Your defaulted payments have already done that so you could either go further down by filing bankruptcy or start the journey towards improving your credit score by negotiating. It’s your call.