People get discouraged when their monthly payments are not sufficient to wipe out their debts. Some of these people file bankruptcy online when they are unable to pay off their debts through the non profit debt settlement programs. Their credit scores drop by 200-250 points after filing bankruptcy. Moreover, they are not able to save all their assets through bankruptcy. This is why many financial experts discourage people from filing bankruptcy.

To justify the above statement, here are few strong reasons that bankruptcy was and will never be the best option to regain the lost financial peace.

Forget the credit cards: Make yourself acquainted with the use of cash every time you step out of your home since filing for bankruptcy will take away all your credit cards. You’ll feel the actual pain when you are struck with any sort of emergencies where you need some ready cash but it will be a distant dream to get that. Moreover, bankruptcy courts will liquidate a part of your savings to meet the tax obligations and pay the creditors. So, in this case you’ll loose both the credit cards and your emergency funds.

Jeopardize your credit score: Bankruptcy will appear on your credit report at least for 10 years. It is one of the biggest reasons that FICO scores drop drastically. Seeing such a stigma on your credit report, future creditors will be extremely wary to lend you any money.

Pay for the secured debts: There is no way you to escape the payments for secured debts like student loans or child support because these financial obligations are non-dischargeable even if you go bankrupt. Debts incurred from incidents like credit card fraud are also non-dischargeable.

Loose assets: You stand to loose many of your luxurious goods, second car, vacation home, stocks and various other investments because bankruptcy courts sell these items to discharge your debts. Though you are allowed to keep your principal home and other essential assets, yet its not that easy to part with the belongings you are dependent on.

Appear on the public records: Your bankruptcy will be recorded in the court documents. Bankruptcy proceedings are recorded as public documents, so your details will find place in it too. Any one investigating your financial history will get an easy access to those documents.

Therefore, it is better to get the help from a non profit debt settlement company to discharge your debts than opting for bankruptcy.

Why is all of this happening? The easy answer is that banks and creditors and anyone offering you a credit card are all looking for one thing, more money. These creditors and lenders know fully well that many people will buy on credit, not understanding the consequences of their spending. Soon after the consumer is up to their eyeballs in debt and has no idea where to turn.

Banks and creditors know that they are setting up many of their customers for these terrible and stressful situations. Do the banks care? Absolutely not. Contrary to what most of us assume about banks and creditors, they are only out to make as much money as possible.

All consumers must realize that the only reason that your bank or creditor has treated you nicely in the past is to get you to take loans and credit from them. If you have ever applied for a loan or a credit card with your bank, you will surely remember how they treat you like a king while you are applying. The royal treatment then begins to fade as you use the loan and start making payments. Then when you run into debt problems, the royal treatment that got you to trust your bank completely vanishes!

Understanding who is suing you will determine a large part of your defense strategy. 9 out of 10 times the plaintiff (party suing you) will be the creditor. It is fairly rare to see a third party debt collector take a consumer to court to attempt collection. Creditors will sue only in the event that it becomes their least costly option for collection. If you can keep your bank or creditor from feeling this way, you will rarely if ever get sued.

If a creditor does sue you, you will need to defend yourself using the strategy of requesting documentation that the bank or creditor had money in their possession which they then lent to you. You will be requesting proof that the money that was supposedly loaned to you was in their possession previous to the agreement, as well as a valid, signed and dated contract between you and the bank or creditor.

Often times the bank or creditor will not be able to provide these things for you. By continually requesting these items that prove that the bank or creditor did in fact loan you money that was previously in their possession, you will expose that the bank did not have a valid contractual agreement with you. In most cases this will be enough evidence to support your defense in a motion for summary judgment.

Banks, like debt collectors, are simply businesses trying to make money. However, banks are especially money hungry. They have already made massive amounts of money due to the process banks use called fractional banking. The bottom line is that they want as much money as possible from you, not to cover their losses, because they have already done that, but to increase their earnings. If you don’t have the money to give, then you must deal with them.
The first step when dealing with your original creditor is to decide you don’t want to pay. This may sound absurd to you but trust me I have seen many people in your situation who have used the resources provided by Plan B Credit And Debt Consultants to help them out of almost any credit or debt situation.

Plan B Credit And Debt Consultants can help you through the first stages of the collections process through the use of debt validation letters. These letters are designed to help you know exactly what you must pay, if anything, and what your rights as a debtor are. These letters can protect you in the initial stages of debt collection from the abuse that is prevalent when dealing with creditors and debt collectors.

There are a few different reasons for this. First, a third party debt collector will almost never have a signed contract with you (the consumer) and the original creditor. This contract must exist and be signed and dated by all effected parties stating that all three parties are in agreement of the transfer of the debt to the third party debt collector. Without this signed agreement, the third party debt collector will not have a case that will stand up in court.

All that being said, if the consumer begins making payments to the third party debt collector, the debt collector will then make the argument that there was consideration even without a written agreement. This means that your actions show that you agree to make payments to the third party collector that in turn takes the place of the written agreement.

I am sure it makes more sense now why third party debt collectors are always trying so hard to harass consumers to make at least one payment. For the debt collector, this one payment is as good as a written contract!

Creditors on the other hand do have written agreements with almost all consumers they extend credit to. Because creditors have these agreements they are more inclined to sue if the cannot collect on the account in a less costly way.

Both creditors and third party debt collectors will be left with no choice other than to sue if the consumer sends them a cease and desist letter. In my experience I strongly discourage sending letters to cease and desist. They will almost always worsen your situation.

Be a responsible payer, the earlier you settle your accounts the lesser your chances of being charged with tax loans. Nowadays it is difficult to trust, but your creditors took a risk on you hopeful that you would mutually benefit from the agreement. This is a win-win situation. Your creditors earn from your loan (through the interest) and you will gain a favorable credit report that is very crucial in determining your credit score.

When choosing what credit to use in your financial transactions choose the one that can give you more profit -corporate credit. This type of credit will give you several options to choose from with regard to paying your debts, plus your net worth will boost as you do business deals. Another type of credit is called personal credit, although this system keeps you motivated to pay your creditors it doesn’t give you the increase you need for your net value.

It is not a fact that bankruptcy will get you out from debts, in most cases it does the opposite. You might not know the process which happens upon filing bankruptcy. First you will be asked to write a list of all your creditors. Then you will be requested to inform all your creditors through a formal letter reporting that you filed for bankruptcy. The next event that will happen will be a lot more difficult because you will be forced to divulge all your asset information breaking the walls of your private life. Of course there will be a court room trial which is made to investigate your financial restructuring plan which will be attended by a lot of people. Another disadvantage of filing for bankruptcy is the filing fees you need to pay which is around $5, 000. You can decide on how to settle your balance, usually it would take 2 to 5 years for that which you need to pay on monthly installment base.

Many banks in the US have become strict with their laws when it comes to debt settlement. Let me give you a list of some of the banks which would not settle with anyone: Citibank, Amex, Capital One, Discover and the list could go on and on. These are just some of the facts that settlement or relief programs personnel don’t want you to know. Another thing they won’t be telling you is about their secret charges of up to 15% of your total balance which is really a big amount to waste on them! So be very careful in choosing such programs and always ask them to disclose all possible charges beforehand.

If you are capable to buy assets then do it! It is something that can give you a long term benefit even without putting effort to it after your investment. Let me give you an example: when you purchase a house you can have it rented or live in it or have someone else take care of it. For several weeks or months it will not give you a big profit yet but once you sell it after sometime say 5 years, the value of the house will increase giving you a very big profit! But just a warning, very rich people or even politicians don’t name their assets to their names for the sake of security. No one will be able to take away something from you if they don’t know you own anything, makes sense!

Hope you find this article interesting and informative. So good luck and have a debt free living…today!

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