Before Filing for Bankruptcy
Many people feel overwhelmed with debt and do not think there is any other way to eliminate the bills except to file for bankruptcy. Before filing for bankruptcy, there are steps you can take to help lower bills and even eliminate some altogether. As you review your financial situation and decide the best course of action, you may find the following advice pertinent.
Settlements
Before filing for bankruptcy, deal with your credit card companies on a regular basis. Even if your credit card bill has been charged off, you can contact these companies and ask for a settlement amount. If you are able to come up with a lump sum to pay the settlement amount, this bill will be eliminated after payment. Since having to charge off a bill means that the company will take a complete loss on the amount, most are willing to offer a settlement amount that is about 50 percent of the original bill. If you continue to ask for a settlement amount that is lower, you can even get amounts as low as 30 percent of the old bill. There are no payment plans for a settlement amount, so unless you are employed and able to make a lump sum payment, this option may not be for you.
Lower Payments and Fees
Another tip to follow before filing for bankruptcy is to ask creditors for a payment program with lower payments. If your current payment plan is $200 a month, ask for a monthly payment amount of $100. The company may tell you that this amount is not feasible, so let them know that you are planning on filing for bankruptcy unless they can work with you on this debt. Many will jump at the chance to be able to collect the lower payment, simply to avoid releasing you from debt through bankruptcy.
Many credit card companies are more than willing to work with a consumer on their late fees, over-the-limit fees, and interest rates to avoid bankruptcy. Contact your credit card companies and ask if they will lower your interest rate. Many consumers are not aware of the fact that interest rates over 29 percent are not ethical and will continue to pay them. If you have been a good customer and not missed many payments in the past, you can ask that your credit be reviewed with the company and a lower interest rate be granted. If the company is unwilling to do this, ask for lower monthly payments that you can afford. Only you know what your financial situation is, so make sure that the payments you ask for correspond with your ability to pay.
Debt Management Groups
Before filing bankruptcy, use all the outlets available to you, including debt management groups. These are non-profit organizations that offer counseling on your debts and help you to set up payment programs through their company, which will ensure that you are able to meet the required payments on a regular basis. These companies can help you get bills lowered by eliminating late fees and over-the-limit fees, and even bartering lower payments for you with your creditors. Some of these companies work for a fee, so ask about all associated fees that will or will not be included in your regular payments.
