If you qualify for a Chapter 7 bankruptcy, here is a strategy that I recommend to my clients who are reluctant to file bankruptcy because they feel morally or spiritually obligated to repay their debts. It’s simple and powerful.

First, file bankruptcy and receive a discharge of your qualifying debts and then pay those debts that you feel morally or spiritually obligated later. You will have all the negotiating power. Is Visa or Master Card going to refuse your payments? In a simple answer – no they will gladly take your money.

You can make payments or you can employ a more powerful strategy of saving up to pay off the balance in full.

Here’s how: contact your credit card company or other creditor, and make a the following offer: Agree to pay the balance in full (since the filing of bankruptcy will have stopped the accrual of interest and penalties you are better able to determine the precise amount) in return the credit card company agrees to remove the negative credit history from your credit file or if they are unwilling to do that, they agree to note that your account has been “paid in full”.

Although this no guarantee that this will improve your credit score (it is possible and I have used this same strategy in negotiating with credit card companies pre-bankruptcy/post charge-off), but those seeking moral justification of paying off discharged debts can relish in the fact that their credit reports now show that the debt was “paid in full.” This can be a powerful and satisfying feeling.

Negotiating with credit card companies is very frustrating because you honestly want to pay your debts, but can not afford to make the payments the creditors are demanding, and as interest rates and penalties compound, the hope of paying these off in this lifetime is close to zero.

I often suggest to clients that if they feel morally obligated to pay these debts, but are unable to negotiate and structure repayment, they should consider filing bankruptcy and than repay the credit card companies after they receive their discharge.

This strategy appeals to a lot of people since they have a strong moral sense to repay their obligations, but under the current circumstances are unable to pay. So by filing bankruptcy you actually create one scenario in which you can regain control of the ability to repay these “debts” (Remember, if you file bankruptcy and the debt is discharged, you have no legal responsibility to repay the debt), and by voluntarily repaying the debts you accomplish you goal to repay, but under terms and conditions you now control.

IMPORTANT: By simply repaying your discharged debts, you are not obligated to continue making payments. In other words, if you begin making payments, it does not now legally obligate you to repay.

Disclaimer

Fresno-Bankruptcy-Lawfirm.com is owned by the Law Offices of Jeffery D. Rowe. We are a debt relief agency. We help people file for bankruptcy relief under the Federal  Bankruptcy Code (Title 11 of the United States Code). If you would like to discuss your situation in further detail, please call our offices at: (559) 228-1500 to schedule a consultation.