You probably want to consult with a bankruptcy attorney in your state who will be able to give you a much better answer given your sate laws, specifics of your situation, etc.

I wish you the best.

I may not have the circumstances correct but if that’s what happened you should take a free consultation with a local bankruptcy lawyer and see what they suggest.

As far as your other debts are concerned, if you have little or no income coming in and you have no other sources of cash that you can access (maybe by selling off some things or downsizing your lifestyle), then it sounds like bankruptcy may be something you are facing at some point.

In order to reduce your debt through a debt settlement program (a bankruptcy alternative), you need to have some income to make the reduced monthly payments.

See if a local bankruptcy attorney can give you some good advice.

The cost of living for all the basic items like food, housing, electricity, etc are all rising especially in expensive states like California. I think your problem is one shared by millions of people around the country and unfortunately, there does not seem to be an easy answer. Yes, you should be careful about using your credit cards to cover your expenses because one day you will wake up and find your credit card balances have gotten way out of control forcing you to seek bankruptcy or a bankruptcy alternative like debt settlement.

If you can take a hard look at your monthly expenses and try to stop spending money on non-essential items each month, that may free up some money and allow you to pay all your bills. Do the best you can to put yourself on a strict budget and stop using the credit cards. I know it’s easier said than done, but that’s often the only way to prevent serious financial problems and may allow you to get back on track. Thanks.

In general, your payments in a debt settlement program would decrease over what your payments are with the credit counseling agency you are with now. Could you afford a payment that was reduced by 25-40% and still handle your mortgage increase, for example?

If that sounds somewhat doable then maybe you should get a debt settlement quote before deciding on bankruptcy but that’s a decision you need to make. The other thing to consider is the possibility of your mortgage resetting yet again in another year, will that just put you in another bind like you are in now?

These are all questions to consider and I suggest you speak to a professional who knows your situation much better than I do (you can start by speaking about this with your credit counseling agency).

I hope that helps.

Debt management programs are typically offered by credit counseling companies, many of which are non-profit organizations. They provide the following services:

1. budgeting help and financial education
2. consolidation of bills
3. reduced interest rates and late fees

It it meant for people who are struggling but not at all desperate. It helps reduce the accumulation of more debt and keeps a person from getting themselves into a situation where bankruptcy is a real option.

Bankruptcy should be viewed as a last resort and even before a financially desperate person considers it, they should research the debt settlement option first.

Debt settlement with any company has risks as you mentioned and any debt settlement company that tells you otherwise is not being truthful. They have no idea how each “case” will turn out but if you find a solid company with enough experience, it raises the odds of making it a smoother experience. The risks will not go away but it is the only real alternative to bankruptcy for many people.

If I tell a person struggling with credit card debt they can reduce what they owe by up to 60% it sounds perfect. “Where do I sign?” would be a likely response (and often is). However, if you are dealing with a reputable and reliable debt settlement company, they will tell you some of the potential negatives to the program as well.

Bottom line is that debt settlement is a bankruptcy alternative for those who need to get out of debt because they are past the point where they can reasonably get out of their financial situation without a more drastic solution.

While debt settlement is not perfect, it does help a lot of people who need it and allows them to avoid the even worse case scenario of bankruptcy.

The debt settlement option as discussed here is the bankruptcy alternative that most people with lots of unsecured debt use. To qualify you must:

1. Have unsecured debts (explained here)
2. Have some income to make the reduced debt payments
3. Have at least $10,000 in unsecured debts

With debt settlement you are able to drastically reduce the amount you owe without having to go through most of the new legal hurdles of bankruptcy. They decrease your monthly payments and typically have you out of debt within 3 years.

Of course, debt settlement can have its drawbacks but if you are facing bankruptcy and meet the above criteria, it often is a much better option for many people.

Find out for yourself, call one of my suggested Debt Settlement Companies for a free consultation. Get all your questions answered and then you decide if their debt settlement program is right for you as a bankruptcy alternative.