Credit Card Bankruptcy – How to Use the Threat of Bankruptcy to Negotiate Debt Settlements
If you think that the only option left in front of you is credit card bankruptcy, take some time out to think from your creditor’s point of view. You can see that if you don’t pay your debts for a long time, it might prove to be of an added advantage to you. A creditor, who hasn’t received any payment for last one year or so, is more prone to accept, even if you offer to settle the debts with a 30% repayment. This is because it will save him/her from chasing you for another year instead. This may not apply to all kind of debts and then there are ample chances of the creditor suing you or getting a judgment to garnish your salary.
But more often than not, credit card bankruptcy isn’t your only option because creditors are willing to reach a settlement. Once you start receiving calls from a different collection agency, it means that this is a fresh attempt from the second creditor and that the first creditor has already given up. Naturally the second creditor will be keener to reach a settlement with you. So, the more you stretch time and at the same time accumulate money, the more are your chances to get rid by settling for a smaller amount and paying it off at once.
Don’t forget to inform the lender that you are thinking of filing for credit card bankruptcy and once that happens, he/she doesn’t stand a chance to recover any amount from you. At least that is what happens in most cases. Here again, timing is important because if you file for bankruptcy, the lender will have to be in queue to collect and that might take a much longer time. The creditor knows how filing for credit card bankruptcy can further complicate things and is likely to negotiate debt settlements.
But keep it in your mind that you are only using bankruptcy threat as a weapon, and don’t start giving it a serious thought. Credit card bankruptcy will affect your credit rating in a very negative light. It will be almost impossible for you to arrange for any loan or mortgage for the next 7 to 10 years. However, creating this impression is very important, to show how desperate and helpless you are, and as a result, the creditor is much more likely to accept the settlement figure that you are offering.
By: Sankalan Baidya
Tags: Advantage, Attempt, Credit Card Bankruptcy, Credit Rating, Creditor, Creditors, Debt Settlements, Debts, File Bankruptcy, File For Bankruptcy, Filing Bankruptcy, Judgment, Long Time, Money, Point Of View, Queue, Salary