Bankruptcy Alternatives / Debtor's Options

Pay Off Credit Card Debt In Full FAQ

Q. Now that I've read about the other options who would want to pay creditors in full?
A. Actually, most people take this route, then again most people won't need to access this web site.

Q. I am here because I have a serious credit card debt problem, should I consider payment in full?
A. Yes, this site exists so each option can be explored, only then can the right decision be made. First I would recommend consulting an experienced debtor's attorney about your "serious" debt problem. What seems dramatic to some people may be minor to creditors and debt attorneys. For small debt problems you should strongly consider payment in full.

Q. How would you define a "minor" credit problem?
A. Let's say that you can't pay your mortgage this month because your car needed major repairs. The problem stems from a one time occurrance. If you have the money in savings or confident with advances on credit cards you can make those payments easily. I would recommend you pay the mortgage in full and on time.

Q. Couldn't I get the bank or credit card company to let me skip a payment or at least pay only the interest?
A. These may be possibilities which fall under the workout catagory, but banks and credit card companies don't like workouts of any kind. Save your debt workout request for a time when you have a more serious problem. The fact that you got through this problem may even help to do the debt workout later.

Q. How would this help me?
A. Creditors like to see you have done everything you could on your own and made every good faith effort to solve debt problems without their help, before they do a workout. Paying in full this time may pave the way for a future debt workout.

Q. What if I have the money but I just don't want to spend it on my credit card bills?
A. Don't expect much sympathy from the creditor. You promised to pay the bank or credit card company using any and all of your resources and that's what they will demand. All other options may still be available, but difficult to achieve.

Q. If I don't have the money how can I consider paying my debt in full?
A. You could borrow the money by taking a home equity loan or a personal loan, but be careful not to get deeper into a hole from which you can't get out. Do not risk the house for a credit card debt. Read more about dangers of home equity loans here.

Q. What are some other factors that influence this decision?
A. Credit would be one of the strongest. If your credit hasn't been ruined yet paying credit card debt in full may be attractive. If you don't know what your credit score and credit report looks like you should check it.

Q. What if the creditor doesn't report to services, like a freind or relative I owe the money to?
A. These generally call for friendly debt workouts. Here personal relationships play a strong role. It may be payment in full seems a small price to pay compared to the strain of dealing with a friend or relative you can't pay back. If the relationship means that much to you it probably means just as much to the other party and they will understand if the terms of your loan need to be modified. In most of these situations I see the loans end up paid in full but not under the original terms. I would call this a debt workout too.

Q. Are there certain types of creditors that should be paid in full?
A. Sure situations where not paying debt in full could lead to unemployment, think about a loan from a boss, or even your local credit union. Some people, like military personel with very high security clearance or certain bank officers might risk losing their job if they defaulted on certain payments, if you think you might fall into this group try to anonymously find out more. Other loans, like government backed student loan debt must be paid in full by law, although you might be able to get some interest or penalty relief.

Q. Are there any other situations where regular credit card debt might be paid in full?
A. Some debtors feel they never want a credit card again. Others can't live without a credit card. If over use of credit cards got you into trouble you might be better off without any. Otherwise remember you probably won't be able to get a credit card for a few years. Sometimes debtors pick one card and pay it in full so they can keep it. I gennerally find a better option here is a debit card or a secured credit card from someone like Public Savings Bank or Applied Bank. To learn more read the secured credit card FAQ.

Q. Will they let me keep an existing credit card even if everything else falls apart.
A. Most of the time if you never become delinquent they will let you keep a credit card in good standing. Many cards always have the right to cancel your account for other bad credit, even if you are current with them. If you stay timely with them, chances are they won't run your credit report and see the other bad items. Sometimes they know and don't care as long as they are paid on time.

Q. What else should I look at when deciding to pay a credit card in full?
A. The dollars involved and your overall plan will guide you. A chapter 7 candidate with a $3000 card balance should let it go. Remember you can always get a secured card, sometimes with a credit limit of more than your deposit. A workout debtor with a $250 balance on a $5000 live and open credit line should probably pay it off. You will have to pay something to work it out anyway and having a credit line can be very important in completing the workout process. You can read more about benifits of secured credit cards including a bit more on when not to pay off old credit card debt.

Q. I have no special circumstances, I just have what I feel represents serious credit card debt. What level of credit card debt would you call minor?
A. Most debt professionals would call under $10,000 of credit card debt minor and at a level below $5,000 you may find the debt so small no debt settlement company will even talk to you. For small debt balances you might want to look at payment in full or non-profit credit counseling.

Q. I don't have the money and I can't get any, how can I pay creditors in full?
A. I have no magic answer. You may get some hints from my article on Where To Get Money When You Need Money. In cases where payment in full will not be an option and you should examine other ways to fix your debt trouble.

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Debt Consolidation / Debt Settlement Program - Consolidate your credit card and unsecured personal debt with a program to settle balances for 30-50 cents on the dollar. Make monthly payments toward the total settlement over a period of years. Free initial consultation. Learn more and see if your situation fits the program online.

A Guide to Borrowing Money with Bad Credit - Including informational articles on obtaining a home mortgage, auto loan, credit card or unsecured personal loan.

Credit Cards For People With Bad Credit - Read either informational articles on obtaining any type of bank card or credit card with bad credit, including a definition of what is bad credit or look at a complete set of FAQs dealing secured credit cards.

Credit Repair and Credit Rebuilding -Credit repair and credit rebuilding article. Topics include how to repair your credit and warnings about credit repair scams. Links to other credit repair sites and professional credit repair services plus my own Free Guide to Help Repair and Rebuild your Credit Report. For more credit help try 14 Do's and Don'ts To Raise A Score Fast or the Credit Score FAQ.

Who to pay when you can't pay everyone - An article addressing cash allocation for debtors.

How to Get money when you need money - Examines WHEN you really NEED money and how to get money even with bad credit for an emegency or financial crisis.

Stop Home Foreclosure Help - Articles to better understand the foreclsoure process and how to avoid a foreclosure including an interactive tool to analyze your own situation and point you in the right direction to keep your home, a list of various ways to halt a foreclosure, a list of 10 mistakes to avoid when facing foreclosure and foreclosure myths.

Personal Home Budget Analysis - An interactive tool to learn where your money REALLY goes. Input your income and expenses, the program will automatically determine if you have accounted for all you have spent. When you have discovered all your expenses you will be know the details of any overspending. Use this information to help plan and keep a monthly budget or change spending to avoid further debt or bankruptcy.

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Nothing contained herein should be construed to constitute advice for your personal circumstances. This is intended as a peripheral exposure to the various options available, but by no means is this a comprehensive or exhaustive analysis of the bankruptcy laws or their alternatives. Whether or not you should file a Chapter 7 bankruptcy, Chapter 13 bankruptcy, or any bankruptcy, will vary depending on your personal circumstances and should only be undertaken after careful consideration, analysis and after consultation with an attorney experienced with such matters. These pages may contain information and rules peculiar to the Commonwealth of Massachusetts.

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