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Times can be tough and that means that it can be difficult to make ends meet. When it is difficult to pay the bills, you can default on credit cards. This default can cause a number of issues with accounts that are not associated with the ones that have been defaulted on.
There is a misconception that if you default on one credit card, the rest of your accounts will be okay. The fact is that there are different ways that your other credit card accounts can be affected if you allow yourself to default on one or more of your other credit cards. Unfortunately, this is something that a lot of people have experienced because their financial situation forces them to pick and choose which cards are worth keeping and which they should let go.
Let's say you have five credit cards and you can only afford to keep two current. The companies that have the two cards that you wish to keep open may notice that there are marks on your credit report regarding your other accounts. This could cause them to take your high credit limit and make it significantly lower in order to protect their interests.
Even if you stay current on the cards you want to keep open, the credit card issuers may not consider closing your account. Unfortunately, there is always a chance that they will. It is their right to shut them down because they may want to protect themselves from what happened to the other cards. They know that if you let those accounts go, it is possible you could let theirs go too if things get more difficult for you. It is difficult to predict exactly what will happen.
Bankruptcy Protection
One way for you to get through such a situation is to file for bankruptcy protection. You can keep the credit cards that you want to keep by reaffirming them or you can go ahead and include them in the bankruptcy case so you can have the debts discharged. Even if you would decide to not include them in the bankruptcy case, you may still not have much of a choice on whether or not the accounts stay open. In bankruptcy, the credit card issuers may go ahead and decide to close them.
If you own any personal or business property, it could be considered an asset and used to pay off debts in bankruptcy court if those assets are not exempt. Bankruptcy laws vary from state-to-state, so you will have to review the bankruptcy laws for your state to see how they apply to your specific situation.
If you do not wish to file for bankruptcy, there are alternatives that you can take advantage of, such as credit counseling. A second thing to do is find a job that pays you better. If you are a business owner, look at ways you can bring in more business. There have been many entrepreneurs that have used their debt situation as inspiration for turning their businesses around. This allows them to get their debt payments under control so they do not have to risk losing valuable credit accounts.
Expert Advice
Rather than trying to turn a business around or increase your earning income as fast as possible since doing so can be difficult, you can speak to the experts. There are nonprofit organizations that help with debt management. Credit counselors were mentioned before, which means they will evaluate your finances and tell you what your best course of action is. Some offer programs to help you pay back negotiated balances on your debts.
For entrepreneurs having debt issues, there are microlenders that give advice and will possibly offer refinancing options that have low monthly payments. These loans can pay the debts. If you do not know of a microlender that can help you, the Small Business Association district office that serves your area will be able to direct you to a microlender in your area. It is worth trying to save your business since you have put so much of your personal resources into it, as well as your time. Your family has most likely made sacrifices as well.
Another thing to consider is that it is very important to do everything possible to maintain your credit rating. Your credit rating may be a factor when it comes to finding a job, finding a place to rent or lease, and it is what decides whether or not you buy a home or a car. Your credit rating affects how well you can advance in life.
If you are a business owner and your business is having difficulty, it is even more important for you to preserve your credit. You will need it to find a job if the business fails. Nevertheless, you don't want to let it fail and that is why it can help to use as many free marketing methods as you can and take fewer risks. More business owners are more conservative compared to what they were in 2012. In fact, a 2013 survey showed that 80 percent of small business owners are being conservative. This is compared to the 49 percent in the spring of 2012. While it may not pay to be extremely cautious, it is important to consider what debts can do in the long-term. This is so you can make sure they don’t come back and cause you trouble later. You may come across other means of financing that are just as effective for you without the risk that comes with building up a great deal of debt.
Final Word
In the end, you may find that it may be better for you to file bankruptcy on everything or not file bankruptcy at all. You may even realize that there are ways that you can save your finances when it comes to career. Whatever you choose, it is best to not default on any of your credit cards to avoid penalties being imposed by the issuers of the cards you don’t default on.
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