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Credit Card Debt Settlement Opposed To Bankruptcy In The United States – Which Is Best For You?
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.
So, you are in the position where you have been unable to pay off your credit card/s for quite a while now and its got to the stage where your card/s company have sold on your debt to a debt collection agency. Of course, the collection agency will contact you very soon as they want to get “their” money back and also profit too. They want immediate payment.
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 imagine you owe $20,000 to your credit card debts.
- The debt collection agency is asking for a full payment of only $10,000 from you to fully settle the debt.
- The collection agency thus gets 60% of this = $6,000.
- The original creditor receives the remaining 40% = $4,000.
Furthermore, if you were to take the bankruptcy option this would stay on your credit file for a total of 10 years. If you were to take the debt settlement option then it will remain on your file for 7 years in total before you can start afresh.
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)
Further, if you are to discontinue with the plan at any stage your case will be dismissed and you will be right back at the beginning once again, having paid all those added fees, which you lose anyhow.
Therefore, unless your debt is very much insurmountable, it most certainly makes very good sense to focus upon the debt settlement route.
Learn more about credit card help and debt consolidation program to suit your needs.
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