Debt Reduction/Management

Question:
I am considering filing for bankruptcy because of my credit card debt. I looked at the credit counseling option, but the payment they requested was much more than I could afford. I have seen the sites advertising debt reduction/negotiation. I was wondering if that is a viable option before I file? Has anyone had any experience in that area?

Answer:
Debt reduction/negotiation is the same as you calling to ask for a settlement. Some say you can do it yourself, which in theory you can. Problem is, the companies don't want to work with you and don't believe you, otherwise everyone would call and get a payoff at a lower amount. The question is, when you get a payoff for all of them, how are you going to pay it? Some companies have a good policy, want to see your divorce decree or proof of what ever put you in the position you are in, and they will work with you. However, all of them must work with you otherwise you aren't getting anywhere. IF you have a settlement offer it must be via mail or fax or some means protecting you against mail and wire fraud. In the past, The Associates, which was purchased by CitiFinancial, offered settlements but never gave the customer enough in writing to protect the customer. Then CitiFinancial went after the customer for the balance due. First Card - same way, just trying to get a big payment out of you. Protect yourself at all times if you play in the settlement/debt reduction/negotiation game. It is not for amateurs. You are warned. Regarding debt management, it depends on with whom you have debt. Some companies won't play. Some agree to the terms and payments and continue to charge you late fees and maximum interest. Some continue to report you as late on your credit report. Watch our for Household, Providian, Sears, Firestone/Credit First among others. As with anything, 10 percent are predators and ruin it for everyone else. The credit counselor wants your business, but can tell you which companies cause a problem if they want to be honest with you. There is a difference between for-profit and non-profit debt management as well. Before deciding, you should talk to one or more attorneys to find out what your options are. Many bankruptcy attorneys will give you a free initial consultation. As far as web sites that advertise debt reduction/negotion, I'd say don't waste your time or money. You can even try negotiating on your own with your creditors, but that doesn't work either. Like someone else here said, they just won't believe your story and won't accept a low payoff. And, if you do file for bankruptcy, you can't have made a special deal with individual creditors shortly before you file -- I think it's called preferential payments, or something like that. If you have a friend or relative that you DO want to pay back without paying other creditors, you can always pay them back after the bankruptcy is completed. Even though you get their debt discharged in bankruptcy, there is nothing to stop you from repaying them anyway -- AFTER the bankruptcy is completed. I am not a lawyer, so these are just my personal thoughts and ideas from my own reading, etc. You really should talk with a lawyer about your specific situation. That's what they are in business for, so they're glad to talk with you.





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