Comparing Ways to Handle Debts
By: Ken Richardson, Current Not yet Rated

If you have unsecured debt there are a variety of steps that can be taken. Some of the choices that you might choose to make include just neglecting your debt, filing for protection in bankruptcy court, directly dealing with your creditors or formulating a plan to pay back your debts over a period of time. Each of these decisions could have a variety of consequences that you will have to live with. In the end, no matter which road you decide to travel, you will have to pay the piper at the end of the road.

If you make the decision to merely walk away from the debts then you will be considered in default on those accounts that you choose to walk away from. Your debts won't simply be gone. You can't simply hide from your creditors. When you happen to be in default, your creditors will most likely start trying to contact you constantly. If those efforts fail to bring forth measurable results, your creditors will start sending you letters in addition to the aggravating phone calls. At some point, often eight to ten weeks after you are in default, your creditors will turn your delinquent debts over to one of the many collection agencies.



When your account has been turned over to a collection agency, the letters and calls will start again in earnest. If none of the tactics produce measurable results for your creditor, they may then sometimes file a lawsuit against you. If the creditors are successful in their lawsuit against you, and they often are, your creditors will then be able to garnish your wages or even put a lien on your valuable possessions as well as the money in your bank account. A good portion of what your creditors can or will actually do to you depends on where you call home. Every state has its own set of rules when it comes to this.

One other option is to file for protection in bankruptcy court. This is an option that should be considered very carefully. You should keep in mind the fact that bankruptcy attornies could end up costing thousands of dollars. Each creditor has an opportunity to protest your attempt to avoid giving them their money. It could possibly turn out that some of them find success in their attempts to prevent you from filing bankruptcy on them. It's possible that you could wind up having to pay thousands of dollars just to go bankrupt and then not even be able to get complete release from your debts!

If you just walk away from your debts or if you make the decision to file for protection in bankruptcy court, your creditors that you default or go bankrupt on will attempt to make things difficult for you. Your credit score will crash and you will also receive many bad notes on your credit report. Once you have bad credit, you will probably have a tough time getting work or even a promotion where you currently work. In short, you will not have the ability to merely walk away from your debts and should you make the decision to file for protection in bankruptcy court, your credit scores will be negatively changed for a number of years and you'll also need to have enough cash at your disposal to cover the costs of a bankruptcy lawyer.



One of the ways that you can get a grip on your debt and get control of your financial direction is to initiate negotiations with the creditors on your list. This can be attempted in a couple of different ways. You could either attempt to address the negotiations on your own or you could try to pay someone to do that on your behalf. In reality, it is not really a good concept to attempt to negotiate the debts on your own. The learning curve is simply too steep. However, if you are willing to be devoted to several hours to the study of how to negotiate with your creditors and you are also willing to deal with them over the telephone, this task can be accomplished.

One of the better ways to deal with your unsecured debts would be to use a good debt counseling association. These organizations are often called debt settlement or debt negotiation associations. Debt companies will check over your debts, your the people you owe money to and your assets and will come up with a plan for repayment that is practicle for your situation and profitable for the debt negotiation firm. They make their money by retaining a portion of the money that you pay them every month. The balance of the money is put apart for making payments to your creditors.

Whether you make the decision to deal with the debts through debt settlement, bankruptcy or by simple default, you will experience an uphill battle when you try to regain your credit score. The main idea to remember is that the credit restoration process can take a considerable amount of time. Try to keep good records of everything that transpires from now until this whole ordeal is finished. Spotless record keeping is essential to successful debt relief. Stay calm, take an approach that is methodical, realize that this is a series of actions that will most likely take a good deal of time and try to remember that many other people like you have been down this road before.

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Ken Richardson is the author of this article about debt. To read more articles on this particular subject you may want to go to his website located at The Debt Consolidation Shop

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