Behind On Credit Card Payments?

Job losses Are Going To Affect Credit Card Payments…

The news is riddled lately with massive lay-offs of employees. It’s also taking anywhere from 3 to 6 months to get another job, and even then, the salary may not be as much as you were previously making. What is going to happen in the interim? Do you have enough saved to pay your rent or your house payments, along with those never ending credit card bills? More than likely, you don’t. What is going to be the first thing to go? Yup….you guessed it, the credit cards.

What Happens If You Can’t Make Your Payments?

If you let the bills go unpaid for too long, they’re going to end up in “charged-off” status with the original creditor and then the account is going to be sold to a collection company. The collections agency will then pursue payment of the account more aggressively. This is considered a very negative occurrence for your credit scores, short of filing for bankruptcy.

If the balance is large enough, the creditor may consider taking you to court and obtaining a judgment against you. Not only will the judgment be recorded against any property that you own in that county, but the judge can also order that your wages be garnished from your employer, or they can order that your bank account be levied to pay for the debt. If you've ever had this happen to you, it can be devastating to find out your bank account has been sucked dry and whatever money you did have in the account, is now gone forever.

A judgment is also going to become a public record item which will stay on your credit report for 7 years, and interest is going to continue to accrue until the account has been paid.

What Are Your Options?

If you know you’re not going to be able to make your credit card payments anytime in the near future, you have a few options:

1. Contact your creditors, explain the situation and see if they can work out an arrangement with you, on terms that you’ll be able to meet financially. Make sure to talk to them about the possibility of not reporting the payment reduction to the credit bureaus, so your account does not reflect late payments.

2. Contact a bankruptcy attorney and find out if you will be able to pass the 2005 Bankruptcy Means Test, in order to qualify for a Chapter 7 bankruptcy, which is a discharge of all unsecured debts.

3. If you do not qualify for a Chapter 7 bankruptcy, discuss a Chapter 13 bankruptcy with your attorney and find out what the repayment terms will be.

4. Contact a legitimate debt counseling company. The company you choose should counsel you regarding your debt and finances, as well as work with your creditors to reduce your interest rates and set up a structured re-payment plan to pay off all of your debt within a certain period of time.

Which Has Less Negative Effect On Your Credit….BK 13 or Debt Counseling?

If you do not qualify for a Chapter 7 bankruptcy, which a complete discharge of your unsecured debts, you might want to consider repayment arrangements through a debt counseling company versus filing for Chapter 13 bankruptcy.

Both of these options require that you repay your debt for cents on the dollar, and both are accomplished in a set period of time. You’ll need to compare both options and weigh the savings between each, but if the difference is not significant, then as far as your credit is concerned, you’re better off with a debt counseling company.

If you know you’re not going to be able to make your credit card payments, contact a debt counseling company immediately and find out what they can do for you. If they can work out arrangements with your creditors before you ever get behind, your credit report may never feel the effects of your situation. That is the ultimate goal.

By filing for Chapter 13 bankruptcy, this is about as negative as it gets on your credit, not to mention that the public record stays on your credit report for 10 years.

For more information, visit: http://BankruptcyCreditTrauma.com