Tips on how to Use the Threat of Bankruptcy to remove Personal debt

The mantra of using the credit card "spend now and pay later" has gripped most of us in its vicious cycle that we end up deep in debt without even realizing it. By the time we wake up, we are so deeply enmeshed in it, that there is no way out. However, in this recession hit economy, this can be used to your advantage to reduce your debt.

If your credit debt is $10,000 or more, you are eligible to consider this option. It is not easy on the creditors to let go of the money that was spent by you. They want to get back every cent. So the idea of reducing your personal debt is not so palatable to them. While negotiating with the creditors, try to reduce your debt by as much as possible. Many a times, when you are not doing well on negotiations, the threat of bankruptcy works.

Bankruptcy is neither a good option for debtor or creditor. For the debtor, the record of bankruptcy ruins their credit report for 10 years and this information is available on their public record for everyone to see. The court takes away your assets and sells them to recover as much as possible. For the creditor, the chance of recovering money from the debtor simply fades away as legally they do not have the right to ask you for any payment and the amount that they get after sale of all the assets is peanuts as compared to the amount was originally owed. Keeping this in mind, the creditors would allow for the debt settlement.

Due to economy in lurch and lot of people filing for bankruptcy, now is the good time to look for debt settlement as an alternative to become debt free.

Tips on how to Use the Threat of Bankruptcy to remove Personal debt

By: meena jha

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