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Getting Rid Of Credit Card Debt Through Informal Bankruptcy

Getting Rid Of Credit Card Debt Through Informal Bankruptcy


Informal bankruptcy refers to the selection of which debts not to pay without having to file for bankruptcy. In a nutshell, this means informal bankruptcy provides no protection from creditors. For many debtors, it is important to distinguish between secured and unsecured creditors. Once you stop payments to unsecured credit card banks to minimize credit card debt, you strengthen your financial position as you pay secured creditors including car loan holders and home mortgage. Secured loan lenders are the ones who have the best legal recourse to extract the debt owed.

Generally, credit card companies are not very adept at collecting debts with overdue balances. They are required by the Federal Reserve to create a budget for a certain percentage of bad debts. Because of this, they expect credit card holders to be unable to pay back the money owed. This is the reason why most credit card companies do not make much effort to collect bad debts.

Once a debt has been left unpaid for a certain number of months, the creditor will transfer the collection to a debt attorney. These attorneys work on commission, which is about 30% of the owed balance. These debt attorneys do not expect delinquent debtors to pay right off the bat so they use threats, lies and legal firm letterhead to pressure debtors to pay their debts.

It is important to educate yourself about different laws that apply for credit card debt, collections and consumer rights to save yourself trouble from debt collectors. If you are debt savvy who is difficult to extract money from, debt collectors will not harassed you at all.

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