There's no doubt about it. Rising unemployment rates, reduced income households, and rising prices are making it more difficult than ever before for people to keep up with their bills. They're turning to their credit cards as a source of supplemental income and when their credit limits finally run out they begin defaulting on their loans.
Credit Card Companies and Chapter 7 Bankruptcies The number of chapter 7 bankruptcies filed around the country has grown in staggering numbers. Your credit card company knows exactly what this means. The money they're getting from minimum or below-minimum payments on struggling accounts will soon disappear. Instead of something, they'll soon be ordered to wipe your slate clean, losing hundreds and in many cases of thousands of dollars plus interest.
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How are Credit Companies Responding? Many credit companies are attempting to take a proactive stance when it comes to credit card debt and accounts that have fallen behind or have stopped making payments altogether. As a result, many are offering debtors the opportunity to settle their debts for less - in some cases far less - than what is owed. Some credit card companies are waiving late fees, lowering interest rates, and allowing credit card holders to make lowered payments, often lower than the normal minimum, just to ensure that some payment is made. In many cases these arrangements are only temporary, lasting anywhere from six to twelve months at a time.
Other credit card carriers are taking note of accounts that are in particularly bad shape and are offering reduced payment plans. Some are willing to reduce debt by as much as 70%, negotiating new payment plans to wipe debtor's accounts clean after they pay only 30%. In many cases they will try to tell debtors that if they take a reduced payment plan their accounts will remain open or show as "closed at consumer's request" which is often less harmful to their credit ratings.
There are other credit card companies who aren't as willing to work with the public. A few feel that their debts should be repaid and instead of helping consumers continue to cut credit lines, increase their fees, and hike interest rates to staggering percentages.
Of course, if debtors aren't willing to make any type of arrangement the credit card companies will send their accounts to third party collection agencies. Even in these situations, creditors are giving collectors more leeway, allowing them to reduce balances and settle debts so that at least a portion of the debt is wiped clean.
Do I have to Accept Payment Terms? You, as a consumer, are under no obligation to accept lowered payment terms from your creditors. You should, of course, seriously consider whether or not you can financially afford to accept lower terms as doing so may help you to avoid bankruptcy. Just remember one thing - the credit card company isn't out to help you - it's out to collect a debt and stay in business. If accepting a payment arrangement from any or all of your creditors will not help you to get out of debt you should consider to work with your bankruptcy attorney to find a viable alternative.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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