A Bankruptcy Lawyer’s Blog

Debt Settlement Tips – Why to Use the Threat of Bankruptcy to Get Debt Relief?

Before I answer the question, let me point out that the threat of bankruptcy was never a threat until the recession hit the economy. The credit card issuers never bothered whether the individual borrower was opting for bankruptcy or not.

In fact, there have been many instances where the credit card issuers and unsecured lenders have purposefully pushed borrowers into bankruptcy. The basic idea behind this approach was to scare the borrowers into repaying the debts on time. However, today times have changed and they have changed for the better.

Today, even the mention of the word bankruptcy has become a threat for the credit card issuers. Why? Millions of individuals have filed for bankruptcy and they all were customers of credit card companies. This meant that the card issuers have lost billions of dollars to bankruptcy.

So much so that they came very close to bankruptcy. In such a scenario, if you explain that you are facing financial problems and that absence of any assistance from the card issuers will push you towards this financial decision, you immediately get assistance.

What sort of assistance can you expect? For starters, you will definitely be offered extra time to repay the debt. If it is sufficient, you should utilize the same and repay the excess debt inclusive of the interest. Of course, you can always negotiate for a reduction in the interest rate so that you can repay the debt faster.

Card issuers have understood that focusing too much on profit during the recession is harmful for their finances. That is the reason why they are prepared to suffer losses as long as it assures them of a steady cash flow.

The primary reason why you should use the threat of bankruptcy is that it will help you get a debt settlement deal. The settlement deal involves a 50% to 60% discount on the total amount owed combined with an installment facility to repay the balance amount. This is the best form of debt relief available in the market.

The threat of bankruptcy is the best solution because it will definitely attract the attention of the credit card issuers. On the other hand, a mere statement of all the financial problems that you are facing will probably be met with stubborn and inflexible resistance.

Make sure you or the professional settlement company negotiating on your behalf, consider this point and use the threat of bankruptcy wisely.

If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called “Free Debt Relief Networks” that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below:

Free Debt Help.