Credit Card Debt Elimination
Debt Elimination Strategy
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If you have been living under a mountain of debt for even a short while you know how good it would feel to be able to come to the surface and enjoy the sunshine once again. But as long as you remain buried in debt that seems like an impossible dream. If you’ve been trying to pay off your credit cards but you just can’t seem to get anywhere and the future looks bleak, then maybe it’s time for you to seriously consider getting rid of your credit card debt entirely.Basically You Have 4 ChoicesYou could simply pay off your credit cards, cut them up and be done with the whole mess. Of course, to do that you would need an infusion of cash to pay your cards off with. It’s possible that you could take out a home equity loan or even a personal loan and use the proceeds to pay off your high interest credit cards. Doing that would not eliminate your debt entirely, obviously, but it should reduce your monthly payments and possibly give you some breathing room.You could negotiate a debt settlement with your card holders. If you can show them that you are on the verge of bankruptcy they may forgive 50 percent to even 80 percent of your debt, allowing you to pay it off either all at once or over a very short period of time.Or – you could declare either Chapter 7 or Chapter 13 bankruptcy. Under a Chapter 7 bankruptcy your debts are wiped away entirely (all except your mortgage!). A Chapter 7 bankruptcy stays on your credit record for 10 years and can make future borrowing more difficult and can even affect your candidacy for some jobs.A Chapter 13 bankruptcy is not as drastic as a Chapter 7. Under Chapter 13 you negotiate a restructuring of your debts (including your mortgage) with terms that reflect your actual financial situation. You are still required to pay all (or most) of your obligations, but under reduced rates and over a longer period of time.Which Debt Elimination Strategy is Right For You?Only you can answer that question. If you are thinking that you might want to buy a house within the next few years, then a Chapter 7 bankruptcy might not be your best choice. But if you’ve lost your job and have no income whatsoever then debt settlement or Chapter 13 probably isn’t right for you.Whichever debt elimination strategy you choose, set it in motion before your debts are sent to a collection agency. Once your debts are in the hands of a collection agent your options shrink and your negotiations become far more difficult.Bankruptcy – Your Trump CardBankruptcy is not something that you should enter into lightly. A bankruptcy stays on your credit record for up to 10 years and can make it impossible to get certain loans in the future, or it can make future loans considerably more expensive. That being said, if all other options fail then bankruptcy may need to be placed on the table. Keep in mind that your lenders do not want you to declare bankruptcy, especially a Chapter 7 bankruptcy which would mean that they would never see a penny of the loan that they made to you. So if necessary use the threat of bankruptcy to your advantage as a lever to pry greater concessions out of your lenders as you negotiate a debt settlement or a debt restructuring.TSC Sources & Recommended Resources
