How to Use Credit Cards to Pay Down Debts Before Bankruptcy
- 1). Work out a modified payment plan. Act fast before your accounts become delinquent or are turned over to a debt collector. Explain to your creditor that you must reduce your payments to a more reasonable level and offer specific reasons why the reduction is necessary.
- 2). Pay off secured debt and higher interest debt first. Pay off secured debt first and then work your way down sequentially until all or a portion of your debts are repaid. Failure to repay secured debt will result in the forfeit of the asset used to secure it such as a house or car, so pay off these debts first, when possible, followed by high-interest debts.
- 3). Take advantage of zero interest credit cards. Transfer credit balances to zero interest credit cards if you meet eligibility requirements. Doing so will save you interest costs and allow you to pay more money toward your outstanding debts.
- 4). Make multiple balance transfers if necessary over a six-month or one-year period, which is about the time it takes to complete the bankruptcy filing procedures.
- 5). Work with a credit counselor. Licensed credit counselors can help you to reduce interest rates, waive fees and settle large debts. In some cases, a credit counselor may be able to facilitate such processes more quickly than if you were doing so on your own.
- 6). Meet with your creditors and your credit counselor together to determine if a settlement of larger debts is an option and at what rate. Agree to have the debts settled and reported as "paid in full" on your credit report. Charge the settled debt as agreed upon.
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