In 2010, 1.5 million people are expected to file for bankruptcy and even more in 2011. If you are one of these people who are considering the process, there are some important things you need to know. In a bankruptcy filing, any money that is in your bank account, at the time of filing, technically is property of the bankruptcy estate. If you don’t have an exemption to protect it, the bankruptcy trustee can possibly take some or all of it. Legally, it belongs to the bankruptcy estate. Sometimes banks try to be helpful by freezing your account where you have no access to the money, even if you have an exemption to cover it. This can turn into a terrible situation for the debtor, when checks for bills start being bounced for insufficient funds. Knowing this in advance, it’s a good idea to pay your bills with cashier’s checks, so you don’t end up getting evicted from your apartment or home. Banks generally have the right to offset a debt with the bank account, but they seldomly do it. Many times when a bank is notified of a bankruptcy filing they immediately freeze the bank account and ask the court to access the funds owed to them.
When using a credit union, most consumers are oblivious to the fact that the credit union they keep their money in has a cross collateralization clause in their terms contract. A cross collateralization clause is the Dragnet clause to secure the money in your account against your debts. Many debtors use credit unions for automobile loans and don’t realize that the money they have in their account can be attached to their payments if they get behind. This becomes a problem for individuals that are filing for bankruptcy that want to walk away from their car and give it back. If there is a negative balance and the credit union member has money in their account, the credit union can take it as it was security for the loan along with the automobile itself. These time bombs planted in the fine print of a loan agreement also include credit card debt. Many people who belong to credit unions do all of their banking, credit union credit card, and car loan through the establishment. Where the situation gets very ugly is when a debtor gets themselves in financial trouble and has to file Chapter 7 bankruptcy. Say for instance, they decide they want to keep their car and continue paying for it, but they also owe a large balance on a credit card that they want to include in the bankruptcy to discharge it. When you reaffirm the debt for the automobile you will see that the credit union included the credit card and auto loan together making you owe a large amount if you want to keep the car. In this case, it would probably be the best to give the car back and include the entire amount in the Chapter 7. This is something that consumers should be aware of even if they’re not considering bankruptcy. Credit unions usually have attractive rates on car loans but they usually include one of these clauses. With so many landmines and a bankruptcy filing, it’s very important to consult with a local bankruptcy attorney to avoid any problems that might arise in your personal situation.
15 JunBankruptcy And The Credit Union’s Cross Collateralization Clause
30 JunHow to Avoid Bankruptcy With Credit Card Debt Negotiation
Even if you are overloaded with credit card debt, there is a way out of your financial situation without having to file bankruptcy. Another alternative is credit card debt negotiation. Nowadays, too many people opt to take the easy way out of getting rid of their debts. Bankruptcy has been around for many years. People continue to take advantage of it and use it for their personal use.
Bankruptcy is considered the last thing to do if you can’t get your finances together. However, if this is the route you take, keep in mind that it can have a devastating effect. Not only will it mess up your credit score, it can also prevent you from getting certain types of employment. Employers check a person’s credit record to see how trustworthy they are. If your report is not up to par, then you probably won’t get hired.
With credit card debt negotiation, you avoid the stigma from bankruptcy. You will be able to reduce your debt costs. It helps because then you can get a repayment plan that will help you pay off your debts faster and easier. This is a simple way of paying off debt, yet not be scarred as you would if you chose bankruptcy.
The Processes Involved With Credit Card Debt Negotiation
Usually when customers think of credit card debt negotiation, they get jittery and worried. It is because it entails listening to verbal abuse and other unpleasant talk from the bank’s officials. However, it is essential that you conduct your credit card debt negotiation by being calm and collected. Here are some of the things you need to keep in mind.
Legal action can be initiated
Believe it or not most credit card companies have the legal right to instigate action against you if your debts are of a high amount. After a few phone calls, many customers with debts of only 500 dollars have been sent to the court. This is why timely credit card debt negotiation is so critical in order to prevent such occurrences from taking place. Even in the unfortunate situation that you have to go to court, you can still avail credit card debt negotiation because court proceedings typically take a long while to complete.
Communication is vital
You maybe harassed by the calls from the credit card company about non-repayment but that does not mean you should stop communicating. Communication is vital in order to keep the door of credit card debt negotiation open. Otherwise your credit card company may have no other option but to take legal action against you.
Use mails for communication
It is essential that while you communicate with your credit card company, you use registered mails. This way your credit card debt negotiation process has a tracking system and evidence to show that you initiated negotiations with the bank. Thus, even if you do have to go to court, you still have sufficient proof that you performed adequate credit card debt negotiation from your side but that the bank did not comply. Always make sure to keep the receipts filed and recorded and also keep a copy of your letter that you sent to the bank.
Phone calls: no proof
Phone calls are so much easier than having to type out a letter and then mail it. However, the issue with a phone call to the bank is that there is no real evidence. This is why sending correspondence through mails is so essential when performing credit card debt negotiation. You want a ready reference for tracking your correspondences during your credit card debt negotiation.
Where to start the process
The best place to begin credit card debt negotiation is at 20 or 25% of the debt amount. Collection agencies have a habit of piling on fees and other costs but these needs to be excluded while computing settlement amounts during your credit card debt negotiation.
Don’t be too eager
The moment you show signs that you are overly eager to perform credit card debt negotiation, your creditors will start taking advantage of you. You need to understand that they need you to pay, and declaring bankruptcy would be a major loss for them. Hence it is in their best interests to let you opt for credit card debt negotiation.
Your creditors work to reduce your debt to a certain amount. The amount can be up to 60 percent of the original debt cost. Since you get your debt(s) reduced, you also qualify for lower payments. With lower payments, you can save more money. In turn, the money you save can be used to pay off other debts.
There is money that sits in your account that is set up for you. These funds are to be used get rid of your debt. After enough funds are in there, the negotiation with the creditor starts. After the debt negotiation is completed, you have to send the specified amount to the creditor from your account. After the payment has been made, the debt is considered settled.
The debt negotiation is supposed to be conducted by professionals that are authorized to negotiation with your creditors. It’s better to allow a professional company to do this rather than you doing it yourself. Things will get done properly and quickly. If you were to do it, it may not get executed in the right fashion.
After the negotiation is complete, you can go back to managing your money properly. You can also be grateful that you didn’t have to subject yourself to file bankruptcy. That is one of the worst things you can do. It may be an easy way out for some, but when others check your credit report, they make think differently.
Do you REALLY want to get out of debt? You can learn to negotiate and settle debt for pennies on the dollar and save thousands while getting out of debt. Take a look at Ted Batrons F-R-E-E ecourse on how to settle debt and get on with your life at http://no-debt.net/debt-info/credit-card-debt-relief