If your debt has spiraled to the point where it seems like the collection agencies have you on speed dial‚ your credit has already suffered.
You are not without options‚ but our Los Angeles bankruptcy lawyers know that your approach needs to be calculated.
Bankruptcy is not the only choice. There is debt consolidation‚ debt negotiation and debt settlement – all of which can help. The problem when you try to strike out on your own is that you risk potentially paying or owing a lot more than you might otherwise. Seeking professional legal help is always the best course of action.
Let’s take‚ for example‚ a request to “pay for delete.” A debtor who makes this request is asking the collections agency to allow them to pay the debt‚ either in full or in part‚ if the negative item will be removed from his or her credit report. It seems like a fairly sensible option‚ but it has the potential to backfire if it’s not handled carefully. By letting the collections firm know that they are standing in the way of a credit goal you are hoping to attain‚ you have handed them a power play. Many times‚ this results in collections agencies holding out for more money. In some cases‚ they may not agree to a balance reduction at all. In most cases‚ this may be considered a long-shot.
Working to settle debts on your own may also result in you falling for a series of tactics on which collectors rely to strong-arm you into paying. For example‚ some may threaten you with a “refusal to pay” mark on your credit score if you don’t fork over the cash. But the truth of the matter is‚ if haven’t paid the bill‚ your credit score is already marred – regardless of the reasoning.
That brings us to another point‚ which is how much of a credit boost you can expect to receive by paying a debt collector. The answer? If it’s an older account‚ not much. Let’s say you work out an arrangement to pay an outstanding debt that has already been reported to the credit bureaus. That collections firm will eventually update its records to show that you no longer owe the debt. Less overall debt on your score is good for your credit‚ generally speaking. But you’re not likely to see an immediate benefit in terms of your score.
Another reason you may want to consider hiring a law firm to handle your debt collection negotiations is because you might owe more than you realize. You almost certainly owe more than you originally borrowed. That’s because depending on the agreement you had with your original lender‚ the interest accumulates the longer it goes unpaid. Debt collections firms buy the rights to those accounts‚ and can tack on whatever fees and interest they deem appropriate.
Ultimately‚ haggling with a debt collection agency tends to be an enormous hassle for most people. Not only is this something with which many people are inexperienced‚ too often people are so closely connected to the debt that they find it difficult to sufficiently separate themselves in a way that allows them to negotiate effectively.
When you file for bankruptcy protection‚ creditors must immediately cease contacting you and must half any pending collection action. Together‚ in the peace and quiet‚ you and your attorney can review your circumstances and decide upon the best course of action.
We’re here to help.
If you are contemplating bankruptcy in Los Angeles‚ contact Cal West Law to schedule your free consultation. Call (818) 446-1334.