Credit Card Debt Settlement Opposed To Bankruptcy In The United States - Which Is Best For You?
Nov 11, 2009 Credit Card
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If you are in a dilemma about whether to file for bankruptcy or work out credit card debt settlement then you need to know a number of things to come to the final decision which is best for you.
Let us presume you have been struggling for some time to meet your credit card bills - even the minimum payments are a bit of a struggle now. Your credit card company have thus sold on your debt to a collection agency. Usually within days of this happening the collection agency will be in touch (or endeavor to do so) with you both by telephone and by letter. Its not at all pleasant either! They want their money and they want it now!
Let us say that you have been unable to pay off your visa credit card for quite some time and the card company have now sold your debt to them to a debt collection agency. The collection agency will shortly be in touch with you, often firstly with a letter and then with a follow up phone call with demands for immediate payment.
Lets look at some figures to make this more clear.
- The original amount you owe is $16,000.
- As a full payment the debt collector is willing to accept $8,000.
- The debt collector gets 60% of this amount = $4,800.
- The card company will thus get 40% = $3,200.
Lets look at actual figures here.
- Your original credit card debt stands at $15,000.
- The debt collection agency offers to accept $8,000 as full payment from you.
- The debt collection agency receives 60% of the $8,000 as commission.
- The credit card company get 40% of the $8,000.
So at the end the card company will receive a total of $3,200, which although not nearly as much as you actually owe to them, is a more than they would receive in the case of a Chapter- bankruptcy. In a Chapter 7 though, they would not receive a cent!
By taking the bankruptcy route you also have to pay other fees such as the following:
- filing fee
- attorney fees
- court fees
- pre-filing debtor education course fee (and you have to sit the exam too)
If you were to take the route of bankruptcy there are other fees to pay, namely:
- attorney fees
- a bankruptcy filing fee
- court fees
- a fee payable for a pre-filing debtor education course and you have to take the course too.
And if you were to default on the bankruptcy terms and conditions you would have to start again from the beginning, and would at the same time lose all that money paid towards the above costs. A high price to pay for no results!
Therefore, unless your debt is very much insurmountable, it most certainly makes very good sense to focus upon the debt settlement route.
You can learn more about credit card help and about a debt consolidation program to suit your needs.
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Tags: Credit Card, credit card help, Credit Cards, Debt Consolidation, Debt Consolidation Program, Debt Settlement Program, Finance, money
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