With the economy still in shambles, bankruptcy is on many people’s minds. But is it the right move for you?
Over the past year, we’ve covered a number of alternatives to bankruptcy. Here are our top three tips of 2012. Hopefully, they’ll get you on the right track to financial recovery in 2013.
1. Credit Card Debt: Is Bankruptcy the Answer?
Credit card debt is one of the main reasons people file for bankruptcy. While bankruptcy will likely erase your credit card debt, it can have disastrous effects on your credit score, making it harder to receive a loan, take out a mortgage, or get a credit card.
There are, however, are a few other ways to reduce your credit card debt besides filing for bankruptcy. You can approach your creditors about negotiating a repayment plan. You’ll probably have to show them that it’s impossible for you to make your payments. If so, it’s in their best interests to work with you by lowering your interest rates or monthly payments.
If you do decide to file for bankruptcy, there are a few things you can do to help rebuild your credit score post-bankruptcy.
2. How to Make Aggressive Debt Collectors Pay
Dealing with aggressive debt collectors can be so exhausting that many people file for bankruptcy just to make it stop. Fortunately, filing for bankruptcy isn’t the only way to put overzealous debt collectors in their place.
The Fair Debt Collection Practices Act prohibits debt collectors from calling at unreasonable hours, repeatedly and continuously calling, threatening legal action, using abusive language, showing up at the debtor’s workplace, or deceiving the debtor.
If you feel that you’ve been the victim of illegal debt collection practices, you should contact the debt collection agency. If that fails, you can file a complaint with the Federal Trade Commission. If the harassment continues, you can file a civil suit against the collection agency.
3. What to Do if You Can’t Pay Your Student Loans
With tuition rising and unemployment high, student loan debt has become a ball and chain for many recent graduates. Unfortunately, student loans are one type of debt that isn’t discharged in bankruptcy. There are, however, a few tools at your disposal.
If it’s a federal loan, you can receive a deferment, putting your payments on hold for a time without accruing interest. If you can’t obtain a deferment, you should request a forbearance. That will put your payments on hold but won’t stop interest from accruing. Finally, in certain extreme circumstances, you can have your loan cancelled.
For more bankruptcy-related pointers, remember to visit the Phoenix Bankruptcy Law Blog.
- Debt Relief (FindLaw)
- Paying Down Debt (FindLaw)
- Three Reasons Why Some Debts Don’t Die (FindLaw’s Phoenix DUI Law Blog)
- Parents, Grandparents on the Hook for Student Loan Debt (FindLaw’s Phoenix Bankruptcy Law Blog)