Ohio Attorneys Handling Nonbankruptcy Alternatives
Dealing With Creditors On Your Own
First, you must realistically determine how much TOTAL you can afford to pay per month toward your debt. To figure this, you must make a budget of what living expenses you incur so that you can figure what, if anything, is left over to apply to the debt. Once you’ve determined how much you can pay each month, calculate how long it will take to pay off your debt.
You can ask the creditors for interest rate or payment reductions, but realize, those requests are rarely granted by the creditors. If it will take more than a few years, you may need to consider bankruptcy. Remember, struggling along with minimum payments gets you NOWHERE! Look at your statements to realize that almost your entire minimum payment is eaten up by interest. You must attack the debt itself, and not just keep making “interest only” payments.
Before you liquidate retirement funds to pay off debt, think of the consequences! These accounts took a long time to build up and will be very difficult to replace. Can you really afford to live on Social Security alone? Further, you may end up with serious tax consequences when you cash those accounts! So now instead of owing credit cards, you owe Uncle Sam!
Finally, if liquidating these assets does not solve the problem, and you end up in bankruptcy anyway, you will be very sad to learn that those accounts were very likely protected in a bankruptcy. We highly recommend seeking legal advice before ever cashing in such accounts to pay debt!
Dealing With Creditors Through A Counseling Service
If you cannot create a budget that will allow you to pay off your debt within a few years, you may want to contact Genus Credit Management, Consumer Credit Counseling Service or a similar nonprofit organization to get a free assessment of your situation to determine if their programs may work for you. The idea behind these programs is to negotiate with creditors for reduced interest rates and fees so you can repay debt and avoid bankruptcy.
Beware, however: Most people do find negative credit ratings on their credit reports after participation in these plans. Arguably, if you are struggling to repay debt and avoid bankruptcy, you should get some benefit on your credit report over the person who files bankruptcy. Unfortunately, that is not always the case. Many people find their credit report in the same or worse shape after credit counseling. Thus, you should discuss this with whatever organization you choose, and get some assurances as to how participation affects your credit.
One final note: If you have non dischargeable debt (i.e., if you later file bankruptcy, you are stuck with it) such as taxes, student loans or child support arrears, then paying dischargeable credit card debt through such a program while NOT paying non dischargeable debts, may not solve the problem. If this is your situation, you should seek legal advice before deciding whether credit counseling or bankruptcy is your best option.
Contact Our Ohio Bankruptcy Attorneys
Debra Booher & Associates is one of the leading consumer bankruptcy law firms in northeastern Ohio. Our lawyers file more than 2,000 bankruptcy cases per year for clients across northeastern Ohio. We understand the benefits and pitfalls of bankruptcy, and we can pass this knowledge on to you.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.