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You are here: HOME>GEORGIA BANKRUPTCY LAW QUESTIONS>ALTERNATIVES TO BANKRUPTCY |
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Can I make informal payment plans? Once you know what you owe, you may want to create your own payment plan whereby you allocate portions of your disposable income to your various creditors. Obviously, your negotiating position improves if you can offer one or more creditors a lump sum payment. If you can get your creditors to agree to a payment plan, you should confirm your understanding in writing. As part of your agreement to pay, you should insist that negative credit references be removed when you finish paying your obligations. If you enter into a payment plan, do your best to stick to it. Creditors may want you to sign "consent judgments" or other legal papers spelling out the terms of your agreement to pay. In my opinion, you should avoid entering into any written contract or consent judgments with creditors without first speaking with an attorney since the paperwork you sign could contain admissions of certain facts or could waive rights. What about Consumer Credit Counseling? Another popular alternative to bankruptcy is Consumer Credit Counseling, a nonprofit organization financed by credit card companies and other consumer finance organizations. If your debt is not too overwhelming and you have decent income, CCCS may be able to create a payment plan that allows you to pay back your debts over time. CCCS has been approved as a credit counseling organization that can offer pre-bankruptcy credit counseling to potential bankruptcy filers. While CCCS is an excellent organization, they usually cannot help if you are behind on your car or house payment. They seem to be most effective handling credit card or other installment debt. Realize, too, that CCCS is a non-profit organization created by credit card companies. Their mission is to assist you in paying back all of your credit card debt. CCCS counselors are not attorneys and they are not required to discuss with you bankruptcy or other options. There are other "credit counseling services" you may see in the phone book, advertised on a telephone pole or advertised through unsolicited mail. Some of these services offer to clear your credit file or to get you a new credit file. Usually, these organizations are rip-offs and you should avoid them. A good rule to follow is "if it sounds too good to be true, it probably is." Click here for more information about credit counseling. Finally, you should realize that it will take a great deal of both discipline and money to pay off substantial credit card debt. For example, if you have $10,000 in credit card debt and you want to pay it off in two years, you will need to pay $520 per month; in three years, you will need $382 per month. If you wanted to pay off the $10,000 at $200 per month, it would take you over ten years. Credit card debt is especially stubborn to eliminate because of the high (18% to 20%) interest that keeps adding up. You can figure out how long it would take you to pay off your debt by using an on-line calculator located at the Motley Fool financial web site. Click on the link to visit the Motley Fool website.
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This website copyright 2010 by Ginsberg Law Offices, P.C. All rights reserved. No reproduction of the original content on this site without express permission of the site owner. Please direct inquiries to Jonathan Ginsberg, Ginsberg Law Offices, 1854 Independence Square, Atlanta, GA 30338. |