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JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience:  Attorney in the practice of Bankruptcy Law since 1996
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I have a problem paying my credit card bills. Please ...

Customer Question

I have a problem paying my credit card bills. Please recommend something to help me. Thank you Peggy
Submitted: 9 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 9 years ago.

Hi Peggy:

I can't recommend anything since I do not know the details of your situation, and since it is unlawful to give legal advice in this forum, only information.

But, I can tell you 3 options I have seen people take to deal with unsecured debt (like credit cards). These options are credit counseling, debt settlement, and bankruptcy.

Credit counseling is where the person takes all their bills to one of the credit counseling agencies and the credit counseling agency contacts each of the creditors and negotiates on the interest rates and sometimes even the balances, and then puts it all into one payment. It is not a loan; the person simply pays one payment to the credit counseling agency, which then disburses the money to the creditors pursuant to the agreement it struck with them. Sometimes this is cheaper on a monthly basis than trying to pay each credit card yourself, and it usually saves money on interest.

Debt settlement is where the person contacts each creditor and offers to settle the account for a one-time lump sum payment, frequently around 40% is the amount settled for. The settlement has to be paid in a one-time lump sum payment, not in monthly payments, normally. Things to watch out for when doing debt settlement is to be sure the creditor provides something in writing agreeing to accept the agreed upon settlement amount before sending the settlement funds, be sure it can be proven when the creditor receives the settlement funds, and be prepared for tax consequences since the IRS considers forgiven debt to be income.

Bankruptcy is where the debts are completely discharged (in Chapter 7) and mostly discharged (in Chapter 13).

I suggest you consult with a bankruptcy attorney in your area since many of them offer free consultations and they can tell you which of the above options, or other options which apply to your specific circumstances, are best for you.

I hope this helps and a positive feedback is always appreciated if this was useful to you.

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above (c) by Joseph Ross, all rights reserved.