Debt Negotiation or Bankruptcy

Debt Negotiation with Creditors

In some instances debt negotiation may be an alternative to filing for bankruptcy protection. This is often the case where the unsecured debt is under $10,000 or an individual has the ability to repay the debt or negotiate a lump sum payout. Some creditors will give a generous discount to individuals who can make a lump sum payment to settle their past due credit card balances. The problem is that in order to qualify for the discount the account must be several months past due, causing an individuals credit score to drop dramatically once the late payments are reported to the credit bureau.

The other option is continue to make payments on the credit card debt, if you are carrying a balance on credit cards it is important to make payments that are much larger than the minimum payments on the account. In most cases making the minimum payments on a credit card will result in paying a lot of interest, and having to make payments for many years. When using credit cards they should be used cautiously, and paid off in full each month. After filing bankruptcy I recommend that my clients use credit cards to rebuild their credit rating, but never charge more than they can pay off each month. Most people will receive credit card solicitations after they receive a bankruptcy discharge. This seems to indicate that they credit card companies view these individuals as good customers, and they intend to win back their business after filing for bankruptcy protection.