Credit card bankruptcy alternatives provide a way of eliminating serious debt. Unpaid revolving debt is one of the leading reasons why people file under both chapter 7 and 13. According to the Automated Access to Court Electronic Records (AACER), in the 12 months ending September 2009, the number of people declaring personal bankruptcy reached 1,344,095. Filing for bankruptcy helps individuals to free themselves from unsecured debt, including personal loans, credit cards, repossession deficiencies, negligence claims, auto accident claims and business debts. An alternative to bankruptcy can achieve the same objective without the negative ramifications.
Credit Card Bankruptcy Alternatives to Eliminate Debt
Whilst there are valid reasons for filing for bankruptcy, there are several alternatives to bankruptcy available. Settling credit card debt is possible with an unsecured debt settlement program or a Debt Management Plan. These debt free solutions seek to reduce the principal (amount owed) or make repayments more affordable. A professional advisor will help determine what is affordable in order to ensure that money problems are not further exacerbated. Unlike filing bankruptcy, it will be necessary to send any disposable income to creditors.
Unsecured Debt Settlement Programs
A professional negotiator will talk to creditors in order to agree upon a reduction to the principal of up to 50%. Whilst it is possible to extend the repayment period, settling credit card debt is generally achieved over a period of 12 to 36 months. An affordable monthly repayment is made until the end of the agreed term.
Whilst avoiding credit card bankruptcy is an important objective, don't sign-up to an unsecured debt settlement program that front-loads management charges. Any fees should be taken from each monthly payment and not in advance.
It is important to invest some time prior to signing-up to unsecured debt settlement program. Check with the Better Business Bureau for established providers with positive feedback. Ask family and friends for their opinion as they may have personal experiences to share.
Debt Management Plans Provide an Alternative to Bankruptcy
As an alternative to credit card bankruptcy, it may be possible to alleviate money problems with a Debt Management Plan. This debt free solution involves an intermediary negotiating with creditors to agree upon an affordable monthly repayment until the debt is completely cleared.
Unlike an unsecured debt settlement program, none of the principal will be written-off. It may be possible to freeze interest payments and further charges in order to clear the balance more quickly. It is important to note that this is not guaranteed as some creditors will be more helpful than others.
This debt free solution involves paying a management charge of 15% from eachcontribution. The benefit is that the debtor will no longer be harassed by collection agencies as they are receiving payment. All communications with creditors will be performed by an appointed intermediary.
Credit Card Bankruptcy vs Bankruptcy Alternative
Credit card bankruptcy may be the right debt solution, but it will show on a personal credit report for a period of 10 years. It can also make it more difficult to stay in certain professional occupations. An unsecured debt settlement program or Debt Management Plan provide an alternative to bankruptcy for those who are able to make a partial monthly payment to creditors. Before settling credit card debt, always consult a qualified debt counselor to ensure that the right option is chosen from the outset.
Sources
Automated Access to Court Electronic Records (AACER)
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
Comments