Dealing with debt

[Shawn]

Well, I'm not going to give out all my life details but I could use some advice. After a prolonged period of unemployment I'm left with my credit in ashes and the collection agencies, etc nipping at my heels.

So what is the best method of dealing with this stuff.

Is debt consoldiation the answer (Consumer Credit Counseling, etc)

Or is bankruptcy the better choise, and if so what type of bankruptcy?

It's a depressing topic I know, but I want to try and have a life again one of these damn days, and to do so I need to work this shit out.

Any suggestions would be appreciated.

Thanks.

[jacknife]

I'm no expert here, but a place to start is Clark Howard

[Rooster_Ties]

Don't really have any idea which one is better (for sure), but depending on your exact situation, I'd look strongly at the Consumer Credit Counseling route (instead of bankruptcy).

Sure, bankruptcy might seem like the better or easier choice, in the short run (or even in the medium run). But my guess is that you'll have a really tough time being able to qualify for a home mortgage until at least 7 or maybe more like 10 years after you declare bankruptcy. And it could seriously affect the kinds of loan-rates you'll be able to get for as much as 10 years to come (even for things like car loans, etc...).

Then again, it all depends on how much debt you're in, and what your situation is in general. (And even if I knew more details about your situation, I would only be guessing about which choice is better.)

All I'd suggest is that you at least meet with the Consumer Credit Counseling folks, and see what they have to say.

Edited May 9, 2004 by Rooster_Ties

[Soulstation1]

Talk to Consumer Credit Counseling first

[connoisseur series500]

Good luck, Shawn. Hope things go well for you.

[Eric]

I would opt for credit counseling too. They may help you understand the implications of the bankruptcy option.

Good luck - time is on your side!

Eric

[Dan Gould]

Shawn,

Be aware of a couple of things:

Consumer Counseling services are under a microscope of late over their business practices, so I would not leap into their arms unless I was sure it was a company I could trust.

#2, if collection agencies are on your heels, know that you have the right to declare that you wish not to be called at work, and by law, they must cease and desist. So, between keeping them away while you work and using Caller ID, you can avoid a lot of their hassling.

It won't end your debt problem, but it might make it easier to deal with on a day-to-day basis.

Good luck!

[connoisseur series500]

More advice on the subject:

Credit card companies are often willing to work out deals. They might forgive your debt if you are able to pay them a portion of it lump sum. They know very well that it is better to get some of their money back than none at all. You must communicate to them that you do not have the wherewithal to pay them back.

This strikes me as a better alternative to bankruptcy. Bankruptcy often amounts to a long term debt payback schedule; and in the meantime, you're credit history is destroyed irrevocably. Avoid bankruptcy if at all possible.

Good luck!

[David Williams]

It seems obvious, but apparently a lot of people don't do it: talk to your creditors. As Conn says, you may be able to work out deals, or reschedule repayments.

[PHILLYQ]

Some of what these debt-counseling companies do is to talk to your creditors and negotiate a payment plan. A lot of times this involves a lower interest rate, which can help you a great deal. If the interest is accruiing at 8% rather than 19% your chances of paying it back are much better.I would suggest examining that route before bankruptcy. If you do bankruptcy, your credit will be shot to pieces for a lonnnng time, making car buying, house buying etc. very difficult in the future. If you can work out a payment plan that's better for all concerned- your credit rating is still alive, and the credit card company is still getting something, which is much preferable(in their eyes) than getting nothing. Look at tha websites for some of these credit counseling agencies, see what they do, what fees they charge, etc.