Dealing With Unsecured Debts

By Author: Ken Richardson
Total Articles: 5
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When dealing with unsecured debt there are a number of steps that can be taken. Some of the decisions that you might choose to make consist of simply walking away from the debt, filing for bankruptcy, negotiating with the creditors or deciding on a plan to pay back the debts over a period of time. Each of these decisions will have a different set of effects that you will have to live with. In the end, no matter which avenue you decide to proceed, you will have to pay the piper at the end of the road.

If you make the decision to simply ignore the debts then you will certaily be in default on those accounts that you have chosen to walk away from. Your debts will not simply disappear. It is not possible to simply stay hidden from creditors. When you happen to be in default, the creditors will start calling you night and day. If this fails to cultivate measurable results, the creditors will most likely begin the process of sending letters to you in addition to the unpleasant phone calls. At some point, usually two or three months after default, the creditors will turn your delinquent account over to one of the many collection ...
... agencies.

When your account has been given to one of the collection agencies, the phone calls and letters will start again in earnest. If none of these attempts manage to get measurable results for the creditor, they may then initiate a lawsuit against you. If the creditors are successful in their lawsuit, and they often are, they will then have the ability attach your paychecks or put a lien on your valuable possessions and your bank account. Much of what they can eventually do to you depends on where you call home. Every state has a different set of standards when it comes to this.

An additional option would be to file for bankruptcy. This particular option should be considered very carefully. Keep in mind that bankruptcy attornies could end up costing thousands of dollars. Each creditor has an opportunity to protest your attempt to avoid paying them. It could possibly turn out that a number of your creditors find success in their attempts to prevent you from filing for bankruptcy against them. It's possible that you might end up having to pay thousands of dollars just to go bankrupt and then not even be able to achieve complete release from the debts that you owe!

If you just walk away from your debts or decide to file for bankruptcy, the creditors that you default or go bankrupt on are probably going to attempt to disrupt your life. Your credit rating will probably plunge and you will get a number of negative remarks on your credit reports. Once you have poor credit, you may have a tough time getting employment or even a promotion where you are currently employed. As a result, you will not have the ability to simply walk away from the debts that you have acquired and should you decide to file for some type of bankruptcy, your credit rating will be adversely affected for a number of years and you'll also be required to possess enough cash on hand to pay for a bankruptcy lawyer.

One way to handle your mounting debts and get control of your financial direction is to make negotiations with your creditors. Gaining control can be attempted in one of two different ways. You could either attempt to attend to creditor negotiations yourself or you can pay someone to do this task on your behalf. For the most part, it's not really a great idea to attempt to negotiate the debts on your own. There's just too much to learn in a short period of time. However, if you are willing to be devoted to quite a few hours in learning how to negotiate with creditors and you are also willing to deal with your creditors via your phone, this task can be accomplished.

A preferable way to handle your unsecured debts is to check out a creditable debt counseling association. These types of companies are frequently called debt negotiation or debt settlement companies. Debt companies can take a close look at the debts that you owe, your creditors and your assets and can decide on a payment plan that is viable for your situation and profitable for the debt negotiation firm. The settlement company makes their profit by keeping a portion of the money that you remit to them every month. The balance of the money is set apart for paying your creditors.

Whether you make the decision to take charge of your debt via debt settlement, bankruptcy court or default, you will most likely have an uphill struggle when you try to reestablish your credit standing. The main idea to keep in mind is that this process will most likely take a long time. Try to retain good records and notes of all that occurs from now until this whole process is finished. Good record keeping is essential to successful relief from your debts. Stay calm, take an approach that is methodical, understand that this is a process that will most likely take some time and try to keep in mind that many other people like you have been in this same situation.
Ken Richardson writes articles about credit and debt at http://www.debtconsolidationshop.com as well as other finance related websites.