Debt Negotiation: Alternatives to Bankruptcy

Alternatives to Bankruptcy

If you have a high income and the ability to pay the principal balances of your debts but cannot afford the minimum payments at the current high interest rates that credit cards are demanding, you should probably go through an NFCC-approved credit counseling organization. They will provide credit counseling and a debt management plan that will reduce your credit card interest rates and provide one consolidated payment every month that is paid to the Consumer Credit Counseling Agency. In most cases the process will actually help your credit, because your payments will be made on time every month and after the process is over any indication of consumer credit counseling will be removed from your credit report.

If your debts are too high for you to pay in full, credit counseling may not work for you and you may have started looking into debt consolidation companies that have promised to reduced the amount of debt you owe while avoiding bankruptcy. Beware of these programs. Debt consolidation companies will not help your credit, and they will not stop creditors from initiating lawsuits against you. They can also be quite expensive. You may not realize it, but the payment plan created by these companies only provides you with a savings account at their company headquarters and a payment plan that pays their high attorney fees upfront and only after that is paid in full does it accumulate funds for settlement.