Credit card debt can sneak up on you. You miss a payment or make a couple of late payments, and before you know it, your minimum monthly payments add up to several hundred dollars a month, and your creditors are threatening to sue you over credit card debt.
Credit card holders who are afraid they are going to get sued over their credit card debt have at least three alternatives available to them: they can declare bankruptcy, they can use a credit counseling service, or they can reduce their credit card debt by cutting back on expenses and applying the savings to their credit card balances.
Is Bankruptcy For You?
If your credit card debt is overwhelming and your circumstances make it virtually impossible for you to repay the debt, bankruptcy may be an option for you. Consult with an attorney specializing in bankruptcy to find out if filing bankruptcy would reduce or eliminate you credit card debt. At a minimum, filing for bankruptcy may fend off a creditor who is threatening to sue you over credit card debt. Filing for bankruptcy may also buy you some additional time to pay off your credit card debt by allowing you to restructure all your debts and reestablishing the minimum amount you pay to each creditor.
Since bankruptcy will cause severe damage to your credit score for many years after you file, you should not make this decision lightly. It is imperative that you speak with a lawyer who specializes in bankruptcy law and determine if this is your only choice.
Is Credit Counseling For You?
If you don’t want to file for bankruptcy, you can also avail yourself of the help that credit counseling services offer in order to stop credit card companies from suing you because of debt that you owe. These services try to negotiate a payment plan with your creditors after analyzing your financial situation. When an agreement is made between you, the credit counseling service, and your creditors, you will only have to pay one monthly payment to the credit counseling service. They will then distribute your payment to the creditors.
Although using a credit counseling service can cause your credit report to show that you have made late payments, any negative repercussions that doing so does to your credit will not be nearly as serious as they would be if you had filed for bankruptcy.
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