Card Loan – how to avoid bankruptcy Q: I was laid off last year. Since then, I’ve had no source of income and my credit card loan has increased to nearly $30,000. It has come to the stage where I can no longer repay it. The collection started to become difficult, so I received consultation from an acquaintance who asked what would happen if I was to go bankrupt. What should I do? (30-year-old unemployed = male). A: Bankruptcy definitely frees debtors from their creditors and allows them to restart. However, it is not an easy world. Once you go bankrupt, you lose social credibility and it may become a serious “hindrance” in the future. For example, it may become difficult to create a new credit card or it may become difficult to obtain a loan. Additionally, there will be restrictions in finding a job and during the bankruptcy declaration, prior permission from the administrator is required to travel abroad. Therefore, bankruptcy is not that simple. However, “self-bankruptcy” is a reliable process when communicating with creditors. As for creditors, their biggest concern is how to get their debts repaid, not how to make you go bankrupt. In the case you go bankrupt, the card company will not be able to recover a dollar, due to the liquidator’s expenses. So, in the credit card companies perspective, it is not an amiable option to make you go bankrupt. It is not easy to say that if you sell your assets and appropriately repay that you can ask to give up the remaining bonds. In order to settle the credit card company, you need to negotiate with them. First of all, you will need to disclose all your assets, providing them with credibility that you do not have any income. In order to do this, you will need to show them sincerity and remorse. Additionally, it is important to show them how you got into the situation (such as being laid off) and what you spent with the card. For example, majority of these may be daily necessities and, in this regard, you may be able to obtain sympathy from the credit card company. In my experience, the most effective method is to suggest to the credit card company “If you give up on the balance, I can borrow a small amount (e.g. $10,000) from my father or relative and make up the repayment”. Then there may be a chance of reconciliation. Additionally, every card company and banks share information regarding problematic customers, so if you had problems with other financial institutions previously, bankruptcy may occur. In any case, when it comes to negotiating with a card company, if possible, it is best to obtain expert advice.