Credit Card Debt Bankruptcy - How To Negotiate A Settlement Deal And Avoid Filing Bankruptcy

Credit Card Debt Bankruptcy - How To Negotiate A Settlement Deal And Avoid Filing Bankruptcy

Credit card debt bankruptcy became a common method of getting rid of the unsecured credit card debts during and after the recession. The number of bankruptcy filings increased significantly and it was noticed that the lenders and the entire economy suffered because of this. What about the debtors who filed for bankruptcy? Yes, they suffered as well! The debtors lost credit score and credibility because of bankruptcy filing and the consumer fails to get new credit for 7-10 years. It is because of this long term suffering, despite the fact that whole of the debt is wiped out by bankruptcy, the debtors are now much more inclined towards debt settlement deals and they are avoiding bankruptcy filing.

Settlement is the fastest of all the relief methods and the maximum amount of time required is 3 years and the minimum required is 1 year. There some requirements of debt settlement which the debtors need to fulfill. First, the debtors need to ensure that the collective sum of the unsecured debts is at least $10k. This amount is fixed by the Federal law. Second, the debtor needs to confirm that the debt is not scattered with different creditors and if it is the debtor needs to take necessary steps to ensure that the debt gets consolidated. Once these factors are satisfied, the consumer can negotiate with the creditor on his or her own or hire a professional company which has experience in debt settlement deals.

If the debtor hires a professional settlement firm, the negotiator from the company asks the debtor to freeze all the payments to the lender. After the debtor stops paying, the lender is notified by the negotiator that the debtor is in financial trouble and will be unable to repay the debt in full and that the debtor is looking for settlement. The lender waits for 3-4 months and then contacts a collection agency for debt recovery from the consumer. The job of the agency is to recover the debt from the debtor. The collection agency agrees to pay on 20% to 30% of the total money collected from the debtor to the lender. Here the lender actually is in no situation to get a better deal and therefore has to agree to the collection agency.

The professional negotiator keeps an eye on this deal and when the lender actually signs the deal with the collection agency, the negotiator contacts the lender with a fresh deal of 30-50% of the debt repayment and that too in bulk provided that the lender wipes out the remaining amount of the debt. The lender is threatened by the negotiator that the consumer will be filing for bankruptcy in case the deal is not accepted by the creditor. The lender will therefore, agree to the deal and will wipe off at least 50% of the debt that the debtor has and signs a new agreement with the debtor. The debtor then needs to repay the remaining amount of the money in bulk to the lender. This is how a debtor needs to negotiate a settlement deal and avoid filing bankruptcy.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.

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