Credit card debt is a financial crisis for many consumers today. You’ve seen commercials on television urging you to call a debt settlement attorney or a bankruptcy attorney and all of those advertisements mention credit card debt.
If you are unable to meet your credit card payments, ignoring the problem will only worsen your situation. The first step is to contact your lenders to attempt a solution.
If the problem is a temporary lack of funds, lenders may be willing to work with you to skip a couple payments. However, this option does not work as well as it did in the past.
Lending banks have merged and been bought out and the major credit card lenders today are huge financial institutions. There is often no provision in their organization for helping individuals with financial problems.
If you know how attorneys erase debt, you may still resist as you may be reluctant to pay an attorney when you are suffering from financial stress.
An attorney who specializes in reducing or eliminating debt is worth the money to help you get your financial life back in order.
Negotiation
One of the first steps an attorney will take is to contact your lenders directly. This gives the lenders notice that you are taking steps to solve your debt problems.
Lenders who are unwilling to make adjustments when you ask will often take action to reduce interest rates or lower payments when contacted by an attorney. The lender understands an attorney is involved because the debt is a serious problem.
If they can change terms or interest rate it may allow them to collect what is owed rather than finding the amount reduced or eliminated by more drastic legal action.
Negotiation is most helpful for consumers who are suffering from a temporary job loss, expensive medical problem or from financial consequences of divorce.
Settlement
Another way attorneys eliminate debt is by pursuing a settlement option with your lenders. If your financial problems are long term, your attorney will ask the lenders to accept less than the amount of your debt and consider the debt paid in full.
In previous years, a settlement option was seldom accepted by credit card lenders. The continued bad economic conditions have led many credit card lenders to realize that getting part of the money due is better than getting no payments at all.
This is how attorneys erase debt for many consumers. You will need to pay some money and most lenders require the settlement amount to be paid in on payment shortly after a settlement agreement is reached.
If your lender accepts a settlement offer, the debt will be considered paid in full once you pay the amount agreed on. This amount may be on 20-50% of the debt owed. Remember that a debt settlement for a lesser amount will reflect badly on your credit rating but the damage can be overcome within a year or two.
Bankruptcy
Bankruptcy is the only way to go when no other means are available. Remember, credit is unsecured debt. If you default on a car loan, the lender will repossess your vehicle.
If you default on your mortgage, your home will go into foreclosure. That is because the car and the home secure the debt against them. Items you purchase with your credit card are not used to secure the credit debt.
Filing for personal bankruptcy is a serious step that will affect your credit rating for 7-10 years into the future. The paperwork is detailed and requires you to share your most personal financial information with your attorney who will file to dismiss your debts in court.
For someone with high credit card debt and few assets, Chapter 7 bankruptcy can provide a fresh financial start. You can keep some of your property outside the bankruptcy by reaffirming your intent to continue to pay your car payments or your mortgage. When your Chapter 7 bankruptcy is approved by the court, your credit card debts are gone.
Summary
When you understand how attorneys erase your debt, you may decide hiring an attorney to help solve your financial problems is the best path to take.
