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When dealing with unsecured debt there are a number of actions that can be taken. Some of the decisions that you might make might include simply ignoring your debt, filing for bankruptcy, directly dealing with your creditors or formulating a plan to pay back your debts over time. Each of these decisions could have a different set of ramifications that you will have to deal with. In the end, no matter which avenue you choose to proceed, you will have to pay the piper in the end.
If you make the decision to simply ignore your debts then you will be considered in default on those particular accounts that you have chosen to walk away from. The debts won't simply disappear. You can't simply hide from creditors. As soon as you happen to be in default, your creditors will most likely start trying to contact you around the clock. When this fails to provide measurable results, they will most likely begin the process of sending letters to you in addition to the irritating phone calls. Eventually, usually two or three months after you are in default, they will turn your account over to one of the many collection agencies.
Once your delinquent account has been given to one of the collection agencies, the letters and calls will begin once again in earnest. If none of the previous tactics get measurable results for your creditor, they will then sometimes initiate a lawsuit against you. If the creditors are successful in their lawsuit, and quite often they are, your creditors will now be able to attach your paychecks or put a lien on your possessions as well as the money in your bank account. Much of what your creditors can or will actually do to you greatly depends on where you happen to live. Every state has a different set of standards when it comes to this.
One other option is to file for protection in bankruptcy court. This particular option should be considered very carefully. Keep in mind that a bankruptcy lawyer could end up costing thousands of dollars. Each creditor has an opportunity to protest your attempt to avoid giving them their money. It could turn out that a number of them find success in their efforts to prevent you from getting protection in the bankruptcy courts. It's possible that you could end up having to pay thousands of dollars just to go bankrupt and then not even have the ability to achieve complete alleviation of the debts that you owe!
If you just walk away from your debts or decide to file for protection in bankruptcy court, your creditors that you default or go bankrupt on can most likely try to disrupt your life. Your credit rating will probably plummet and you will receive a number of bad notes on your credit report. Once you have a poor credit rating, you may have a difficult time getting work or even a promotion at your current job. As a result, you will not have the ability to merely walk away from your debts and if you decide to file for some type of bankruptcy, your credit scores will be adversely afflicted for many years and you'll also need to possess enough money at your disposal to pay for a bankruptcy attorney.
One of the ways that you can deal with your debts and get control of your overall financial position is to make negotiations with the creditors on your list. This could be attempted in one of two different ways. You could either try to address creditor negotiations on your own or you can hire an outside entity to do this task on your behalf. For the most part, it's not a good idea to try negotiating your debts by yourself. There is simply too much to learn about the process. However, if you are willing to devout quite a few hours in the study of how to negotiate with creditors and you are also willing and able to deal with your creditors via your telephone, it can be done.
One of the better ways to handle these debts would be to use a creditable debt counseling firm. These organizations are frequently called debt settlement or debt negotiation associations. Debt companies will investigate the debts that you owe, your the people you owe money to and your assets and will decide on a payment plan that is workable for you and profitable for the debt company. They make their money by retaining a certain quantity of the money that you send them every month. The rest is put aside for paying the creditors on your list.
Whether you make the decision to take charge of the debts via debt settlement, bankruptcy court or default, you will most likely experience a tough battle when you try to regain your credit worthiness. The most important concept to remember is that the credit restoration process could take a long time. You should try to retain methodical records of all that occurs from now until the process is finished. Good record keeping is necessary for eventual relief from your debts. Try to stay calm, take a methodical approach, understand that this is a process that could take some time and try to remember that many other people like you have been and are in the same situation that you face right now.
Ken Richardson has written this article about the consequences of debt. You can find more of his work at the Debt Consolidation Shop website.
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