If you have unsecured debt there are a number of steps that can be taken. Some of the decisions that you might make might include just ignoring the debt, filing for bankruptcy, making negotiations with the creditors or coming up with a plan to pay back the debts over a period of time. Each of the decisions you make could have a different set of ramifications that you might have to deal with. In the end, no matter which way you choose to proceed, you will simply have to pay the fiddler at the end of the road.
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If you choose to simply walk away from your debts then you will be in default on those accounts that you choose to ignore. The debts won't simply disappear. It is not possible to simply stay hidden from creditors. When you are in default on your debts, the creditors will most likely begin trying to contact you day and night. When those efforts fail to produce results, your creditors will most likely start to send letters to you as well as the annoying phone calls. Eventually, usually two or three months after default, your creditors will turn your account over to one of the many collection agencies.
Once your delinquent account has been given to a collection agency, the letters and calls will commence once again in earnest. If none of these tactics get results for the creditor, they may then start the process of filing a lawsuit against you. If your creditors do find success with their lawsuit, and quite often they are, they will now have the ability attach your the money you earn or even put a lien against your valuable possessions and your savings or checking account. A good portion of what they can or will actually do to you greatly depends on where you live. Every state has a different set of rules in this regard.
Another option would be to file for protection in bankruptcy court. This is an option that is one that you should think about carefully. Keep in mind the fact that bankruptcy attornies can end up costing thousands of dollars. Each of your creditors has the ability to challenge your attempt to avoid paying them. It may turn out that a number of them are successful in their efforts to block you from filing bankruptcy on them. You might wind up paying thousands of dollars just to go bankrupt and then not even be able to get complete relief from the debts that you owe!
If you choose to ignore your debts or if you decide to file for protection in bankruptcy court, the creditors that are affected can most likely try to make things difficult for you. Your credit score will crash and you will also get many negative notes on your credit report. Once you have bad credit, you will probably have a tough time getting a job or even a promotion at your current job. Stated briefly, you cannot merely walk away from the debt that you have accrued and if you make the decision to file for some type of bankruptcy, your credit will be negatively afflicted for a number of years and you will also need to possess plenty of money on hand to cover the costs of a bankruptcy attorney.
One of the ways that you can deal with your mounting debts and take control of your financial direction is to initiate negotiations with the creditors on your list. Gaining control can be attempted in a couple of different ways. You can either try to manage the negotiations by yourself or you can hire an outside entity to do this task for you. In general, it is not really a great concept to try negotiating your debts by yourself. There's just too much to learn in a short period of time. However, if you are willing to devout quite a few hours to the study of how to conduct negotiations with creditors and you are also willing to deal with them over the telephone, this task can be done.
A better way to take charge of these unsecured debts would be to use a good debt counseling firm. These types of companies are frequently called debt negotiation or debt settlement associations. Debt companies will investigate the debts that you owe, your creditors and your assets and will decide on a payment plan that is possible for your situation and profitable for the debt settlement company. The settlement company makes their money by retaining a portion of the money that you pay them every month. The rest of the money is set aside for making payments to your creditors.
Whether you make the decision to deal with your debts through debt settlement, bankruptcy court or by simple default, you will most likely experience a difficult battle when you try to renew your credit score. The main concept to remember is that this process will most likely take a considerable amount of time. You should try to retain chronological records and notes of all that occurs from now until this whole process is finished. Spotless record keeping is necessary for successful relief of your debts. Stay calm, take a methodical approach, understand that this is a process that will most likely take a good deal of time and also try to remember that many other people have been in this same situation.
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