credit card problems


Drowning in Debt?  Debt Settlement is a Realistic Option!

For consumers drowning in debts they can't pay, debt settlement is often considered before the more extreme step of filing for bankruptcy. Though such settlements have been around as long as loans have been made, this solution has gained wide popularity since the deregulation of banks in the late 1980's...cont below

For a lender, settling for a lower amount than the actual amount owed is preferable to receiving nothing at all should the customer file for Chapter 7.  For the consumer, this option does less harm to his credit for a shorter period of time than bankruptcy and allows the self respect of paying as much as possible on his debts.

It is important to realize that this solution to a mountain of bills cannot be applied to loans that are secured.  Unsecured debts include medical bills, credit cards, department store cards, and personal loans that were made based on your good credit and not secured by personal or other property.

This is one area of lending where you, as a borrower, can have some leverage.  If you truly have suffered a financial crisis and cannot pay the full amount owed, the options for the lender are limited. 

The lender can charge off the money you owe after they have given up on receiving it and can sell the loan to a bad debt company for a few cents on the dollar.  Rather than charging off, the financial institution might sue you but they know that if you don't have the funds, a judgment will be an empty victory.  The collection division has the task of getting as much as they can from debtors.  In the end, they would prefer to receive a portion of what is owed rather than nothing at all.

In approaching your creditors, everything you do should be in writing with all letters sent by registered mail with return receipts so that the company must sign and thus give you a record that the correspondence was received.

Do not hesitate to let the other party know that you are considering bankruptcy as one possible solution to your financial crisis as that provides more motivation.
You should proceed cautiously and calmly.  If you must clear this debt in order to obtain the mortgage for your new home, don't mention that!  Never talk to a collection agency on the phone - period! 

Time is on your side in this.  When an offer is initially made to you, it will not be the best offer.  This is not an environment for "trust" or "assumptions".  Have the exact agreement for your debt settlement in writing in your hand before you write a check to clear the debt.