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I Went With Take Charge America and Refuse to File Bankruptcy. – Nic

“Dear Steve,

I am 29 years old, married, own a home, 2 cars, and self employed.
I started a debt management program with Take Charge America and have paid off approximately $14,000 so far. My payment is $1,327 per month. Due to the nature of my job, my income fluctuates and I have been seeing some difficult times recently. The $1,327 payment is getting to be too much. I still have about $46,000 to go, and approximately 3 years of payments through my program to pay off the total of my credit card bills. I refuse to file bankruptcy.

1. If I can’t make my payments on my DMP and default, should I try debt settlement?
2. Has the debt settlment industry improved its practices since the new laws have been enacted this year?
3. Can you point me to some good information regarding my situation?
4. If debt settlment is an option in your opinion, should I do it myself or go with a reputable company?

Thanks very much,

Nic”

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The Answer

Dear Nic,

Why do you refuse to file bankruptcy?

So I get that bankruptcy is off the table for you at this point. If you can’t make your DMP payment for the next four years then you need to talk to your counselor with Take Charge and see if there is any way to lower the payment. If not you are faced with limited options.

If you decide to launch into a debt settlement program you need to be prepared for your credit to be shot, to be in serious collections, to default on your payments, to potentially be sued, risk having a judgment against you and to have your wages garnished. Oh yes, you may also have to pay income tax on the forgiven debt.

If you prepared for all of that, consider debt settlement. And those bad things are not so much a function of a particular debt settlement company than of the process of defaulting on your debt in order to try and settle the debt before you get sued.

The only legal protection available to people when they can’t make the minimum contractual payments is bankruptcy. Bankruptcy is a legal process that provides relief for people who are in otherwise unmanageable situations with no possible expectation to repay their debt. And debt forgiven by bankruptcy is not taxable.

So to answer your specific questions:

1. If I can’t make my payments on my DMP and default, should I try debt settlement?
A. It really depends if you are ready to face the consequences of risking being sued, have no problem with trashing your credit, and all that other stuff. But I think if you are currently not in a position to save money each month and protect yourself moving forward, saving should be your top priority. At some point you need to stop trying to repair the past and instead start trying to fix the future.

2. Has the debt settlment industry improved its practices since the new laws have been enacted this year?
A. The new laws regarding fees and don’t go into force until October 27, 2010. Not much has changed right now except for a lot of debt settlement companies going out of business prior to the new laws going into force.

3. Can you point me to some good information regarding my situation?
A. You should consider talking to Damon Day for a private consultation. He’s a debt coach and can guide you to get out of this situation after talking over your situation and goals with you.

4. If debt settlment is an option in your opinion, should I do it myself or go with a reputable company?
A. You can do it yourself or pay a company to help you with the process. Again, talk to Damon Day and he’ll guide you in the right direction if the two of you decide debt settlement is the right approach for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

I Went With Take Charge America and Refuse to File Bankruptcy.   Nic
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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