As is the case with mortgages, medical bills and other debts, Pasco County families have alternatives to filing for bankruptcy when they are overwhelmed by credit card debt.
In some cases, a family may be able to negotiate with the credit card company directly for a deferral or some other workout in which the family gets debt relief and the company gets some cash in hand in exchange for not having to pursue a bad debt.
The downside of this approach is that it can affect a debtor’s credit and may have tax consequences. Also, the credit card company has no obligation to negotiate and may proceed instead to file suit under Florida law.
This approach may also not work if a family has other creditors.
Consolidation loans and debt settlement companies
Some people may see an advantage to having a debt settlement company negotiate with the family’s creditors.
For a fee, a reputable company can negotiate several debts on behalf of the family. On the other hand, even the best debt settlement companies may not be able to succeed in reducing debts. Again, credit card companies do not have to offer deals even if asked.
If a family can qualify, they may also use a consolidation loan to pay off credit cards. While this might not reduce the amount the family owes, it can lower interest payments and make the monthly bills manageable.
However, families who are having financial trouble may not be able to qualify for a loan.
Sometimes, bankruptcy really is the best option even though there are of course some drawbacks. For example, unlike the other options, credit card companies must stop collection efforts in most bankruptcy cases and will likely have their debts discharged.