Dear Liz: My wife and I are in our 30s and want to start a family. The issue is that I am a commercial real estate broker and we are not sure when things will turn around. I have stabilized my income, but it is now going toward paying the many credit cards we used when things were tight. We have given up any extravagances we once enjoyed, but it seems like everything we make goes right out the door. Can you tell us about debt settlement? How can we decide whether that is a good option for us?
Answer: When you’re struggling with credit card debt, you’d be wise to make two appointments: one with a legitimate credit counselor (you can get referrals from the National Foundation for Credit Counseling at http://www.nfcc.org) and one with a bankruptcy attorney.
The credit counselor can determine whether you can pay off your credit card debt within five years and avoid bankruptcy. The attorney can advise you about your eligibility for bankruptcy and your other options.
If neither credit counseling nor a Chapter 7 liquidation bankruptcy is a good fit for you, debt settlement can make sense.
You don’t, however, have to pay some debt settlement company a big upfront fee to negotiate for you. It is possible to negotiate debt settlements on your own, particularly if you can pay with lump sums of cash. For more on debt relief options, visit debt expert Gerri Detweiler’s site DebtCollectionAnswers.com.