Credit Card Bankruptcy Tips – Why Threat of Bankruptcy Helps Debt Settlement Negotiations

The term bankruptcy is always a trouble for financial institutions and for the consumers as well if they understand it in real terms. The laws of the state have given a protection to the consumer who fails to pay his debts to his creditor. No one can ask for any recovery if a person is bankrupt. There are some certain criteria for consumer to declare himself bankrupt. This is not easy and simple as many tests are involved in it.

Although bankruptcy eliminates all debts at once but its circumstances are not favorable for consumers. It is an attempt to demolish your financial future and nothing more.

If we think from creditor’s point of view, the most shocking news for the creditor is about the consumer bankruptcy. This is a total loss for financial institution. As credit cards are unsecured debts so there is no mortgage or securities are involved in these kinds of debts. So when a consumer declares himself bankrupt then no option is left for financial institution to recover the outstanding amount. This is a state matter; these are laws which are already decided by the federal governments so no one can challenge the bankruptcy.

The threat of bankruptcy always helps debt settlement negotiations. As this is clear now that bankruptcy is total loss of financial institution so if you use it as a threat, it will definitely make an impact on creditor. While negotiation process, if creditor does not accept your offer you can simply pressurize him using this threat.

When you decide to for negotiations and you go with a debt settlement company for this then there are very simple steps which are involved to negotiate with creditor. The debt relief company will offer creditor a certain amount to eliminate your all outstanding balance. The company will make the creditor realize that the financial condition of the consumer is worst than ever and he can not pay any more. Accept a certain amount or the customer will declare himself bankrupt because he has no option left with him. This will really work and you can forcefully compel your creditor to accept your offer.

Normally it has been seen that these kinds of negotiations end with maximum reduction in the total outstanding amount. Using this you can also get an easy installment plan. One important thing to remember that use it for threat only but do not even think to go for it.

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