If you’ve got been in the business of lending money, you know the pain of having to take out a credit card in order to purchase something new. The longer you stick with that credit card, the more money you pay goes to interest. This can carry over into several months if you don’t pay off the balance on each account. Some people can pay off their credit cards entirely so that they don’t have to pay a high interest rate anymore.
Credit issuers realize that a bankruptcy filing is going to be difficult for them to recover from in the future, particularly if you’re carrying a balance on the card from one month to the next. So they propose the idea of going in and getting the existing credit policies changed.
Basically, it’s going to be a federal tax break for the credit card companies. The credit card companies are going to get a tax deduction for interest charges. The tax companies are not going to pay off your debt until they’ve paid off the whole balance.
There’s a loophole that allows them to do that. The credit card companies don’t have to pay any interest on your debt until they’ve settled your entire outstanding debt.
A bankruptcy filing will not have that effect on you. There’s not an amount of money you have that’s still up or is being paid off before the tax deductions disappear. That’s all that can happen. The credit card company is still required to make a tax deduction. If they don’t pay off their debt, they get a tax deduction and they carry a higher interest rate until they’ve paid off all of their remaining debt.
So, don’t be too tempted to go in and fight the charge. It’s never going to go away. If it’s too much of a hassle, try to negotiate with your creditors about a debt consolidation loan. There’s always a way. But, if you don’t make your payments on time, your credit card debt gets harder to pay.
One good strategy for getting a debt consolidation loan is to look for a business with a good credit rating, as opposed to one that has a horrible record. This can help you maintain good credit and get better rates faster.
Bankruptcy And Debt Collection
With decades of experience in debt settlement banking, and decades of experience and knowledge in debt settlement banking, it is easy to find myself frustrated when someone suggested I file bankruptcy. I immediately thought: Why would anybody do that?
The answer is obvious – to preserve their bottom line.
The losers are the credit card companies.
When people think of bankruptcy, they invariably think of the 1980’s where there was a crisis of the consumer into the modern era. There was no recovery that could be called anything but triumphant. People would throw everything at it as it was too expensive and too costly.
It was the right decision, the right option, except the losers were losers as well.
I was lucky enough to work at a business that offered this kind of service for which the losers usually were the creditor. I used to pay off all my bills really promptly and in full whenever possible. I was lucky enough to see a business succeed in one sense or another. This is not to say that I wasn’t successful.
Today, many people employ the strategy of filing bankruptcy. In many cases, it is a better option as you save money and get the benefit of the doubt if something seems amiss which isn’t directly true.
The problem comes up once again when a creditor contacts you and says they are going to close an account. Isn’t that a big deal? Don’t you just wish they would do something about it? I suppose the answer is yes but they are really offering something to make the situation look better than it is.
It is important that you understand the mechanics of your situation before you propose filing bankruptcy. If it is about to close on your credit cards, you have to act quickly and take action if you want to rebuild your credit.
Before you file bankruptcy, you should understand the terms and consequences of your actions. They need to be understood when negotiating your debt relief. Look at the interest rate before you file bankruptcy – why, it would be much less if you could just pay it off right away, but the interest rate is the first thing you must understand.
There might be a fine line you have to walk on before you file bankruptcy. If you walk that long you risk losing your tax deductions. For example, some companies are willing to raise taxes on the higher rate employees to cover the loss of an interest savings.