Credit Card Debt? Here Are Your Options

Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future. Today it comes on Wednesday. Live with it.

So you just got a summons on the door of your Sheepshead Bay apartment saying you owe $15,000 to a credit card from 2002. What are you going to do?

On my website, I’ve previously discussed what happens when you get sued by a creditor in New York and the available defenses you have. But let’s say the creditor served you correctly, and that you actually recognize the debt and it is an amount you owe. What in the world do you do now?

Two choices: you can either settle the debt, or you can file for Chapter 7 or Chapter 13 Bankruptcy in New York.

If you settle the debt it could take you months, and your credit will still be in rough shape. In other words, your life will consist of calling the collection firm on an almost daily basis and listening to the same schpiel from the “customer service representative.” They typically dont budge, no matter what reason you have for not paying it. They simply don’t care.  They’ll abuse, insult, threaten, harangue, etc.

They care less about your excuses than Ned does about those shopping carts he keeps taking pictures of. (That’s a poor analogy. They’re my friends! — Ed.)

But, putting that aside, the best thing to do is to be realistic. You’re not getting sued by a Creditor because you have a ton of cash lying around and you just dont feel like paying; you’re getting sued because you couldn’t, and likely can’t, afford to pay the damn debt in the first place. If that’s the case then why waste your money attempting to settle over a long period of time and paying thousands upon thousands of dollars when you have other credit card bills that you can’t afford to pay.

Here’s an example to illustrate:

You’re being sued for approximately $10,000. You decide to settle.  After weeks of negotiating, you settle for $6,000. You now have to make $600 monthly payments, further distressing the amount of money you have to use. Plus you now likely can’t afford to pay your other credit card bills. And to top it off, if you miss even one payment, the creditor can say, “No Deal, whole thing is now due.” And, by the way, you’re still in a ton of debt. Great work.

OR

For about one-third of the price (approximately, and depends on each individual case) you can file Chapter 7 Bankruptcy and get rid of all of your debt in four to five months and keep the $600 a month from going to your creditors in the above situation.

Again, I am a bankruptcy lawyer so obviously I prefer that you file for bankruptcy.  But it’s not self interest.  It is because it’s the smart choice in this situation: you save thousands and don’t have to deal with the above nonsense.

Daniel Gershburg Esq., is a real estate and bankruptcy attorney with offices in Sheepshead Bay and Manhattan. The practice was specifically set up to change the way people view attorneys, by incorporating radical ideas like calling people back quickly, returning emails, giving clients ’round the clock access to their cases and charging low fees. For more information please visit Brooklyn Real Estate Attorney Daniel Gershburg‘s website.