When dealing with unsecured debt there are a number of steps that can be taken. Some of the choices that you could make consist of simply walking away from the debt, filing for bankruptcy, negotiating with the creditors or formulating a plan to pay back the debts over time. Each of these decisions could have a different set of ramifications that you might have to live with. Eventually, no matter which road you decide to proceed, you will simply have to pay the piper in the end.
If you make the choice to merely ignore the debts then you will certaily be considered in default on those accounts that you have chosen to walk away from. The debts won't magically disappear. You can't expect to simply stay hidden from your creditors. When you are in default, the creditors will most likely start trying to contact you day and night. When this fails to cultivate measurable results, they will begin the process of sending you letters in addition to the aggravating phone calls. Eventually, normally two or three months after you are in default, they will turn your delinquent debts over to one of the many collection agencies.
When your account has been turned over to a collection agency, the calls and letters will get going again in earnest. If none of the attempts manage to get measurable results for the creditor, they may then file a lawsuit against you. If they are successful in their lawsuit, and quite often they are, your creditors will now be able to garnish your the money you earn or put a lien on your valuable possessions as well as your checking or savings account. A good portion of what they can or will actually do to you depends on where you call home. Each state has its own set of rules when it comes to this.
Another choice that you could make could be to file for protection in bankruptcy court. This particular option should be considered very carefully. Keep in mind that bankruptcy attornies can end up costing thousands of dollars. Each creditor has the ability to object to the fact that you are trying to avoid paying them. It could possibly turn out that a number of them are successful in their efforts to block you from filing bankruptcy on them. You could wind up needing to pay thousands of dollars to go bankrupt and then not even have the ability to bring about complete alleviation of the debts that you owe!
If you choose to ignore your debts or decide to file for protection in bankruptcy court, the creditors that are affected will most likely try to make your life miserable. Your credit score will probably crash and you will also get plenty of bad notes on your report. When you have bad credit, you may have a tough time finding employment or even a promotion where you are currently employed. In short, you cannot simply walk away from the debts and if you make the decision to file for some type of bankruptcy protection, your credit scores will be adversely changed for many years and you will also need to be in possession of enough money at your disposal to cover the costs of a bankruptcy lawyer.
One of the ways that you can take care of your mounting debts and take control of your financial situation is to negotiate with the creditors on your list. Getting control can be attempted in one of two different ways. You might either attempt to manage the negotiations on your own or you may elect to hire an outside entity to do this task on your behalf. In general, it is not really a very good concept to try to negotiate the debts on your own. The learning curve is simply too steep. On the other hand, if you're willing to be devoted to several hours in learning how to conduct negotiations with your creditors and you are also willing to deal with your creditors over the phone, it can be done.
A preferable way to deal with your unsecured debts is to use a reputable debt counseling organization. These outfits are frequently called debt settlement or debt negotiation companies. Debt negotiation firms will closely scrutinize the debts that you owe, your the people you owe money to and the assets that you have and will come up with a payment plan that is workable for you and profitable for them. They make their money by keeping a certain quantity of the money that you send them each month. The rest of the money is set aside for sending payments to your creditors.
Whether you make the decision to take charge of your debts by way of debt settlement, bankruptcy or by simple default, you will most likely have a tough battle when you try to renew your credit worthiness. The main concept to remember is that this process could take a long time. Try to keep organized records of all that occurs from now until the process is finished. Good record keeping is essential to successful relief of your debts. Stay calm, take a methodical approach, realize that this is a process that will probably take some time and also try to remember that many other people have been down this road before.