As always, our recent money mailbag at ABC News Now was filled with great, relevant questions…from how to bounce back after a bankruptcy to closing credit card accounts and trusting debt consolidation companies. Hope my answers were helpful. I’ve posted the Q&As here. The link to the interview is also available at ABCNews.com.

Candace from Kansas City, MO asks:

“I am a full-time student and a single mother who went through a divorce about two years ago.  I am planning on filing Chapter 7 bankruptcy within the next couple of weeks.  What are the best ways to recover financially from filing bankruptcy and will bankruptcy effect any future student loans? (I currently have student loans, but I am still in school and am not obligated to make payments yet).”

When you file for bankruptcy you generally cannot get rid of your existing student loans. You are still obligated to pay for them eventually once you graduate. If money is tight you should call your lender and see if there’s a modification plan you can work out. There are options out there for borrowers, you just need to be upfront and address the loan before it gets out of control.  As for the best ways to recover from bankruptcy – prepare to live on cash for at least the first couple of years, since it will be difficult to get any loans or credit lines during that time. You may want to apply for a secured credit card at a local credit union to re-establish some credit. A secured card uses your savings account as collateral for the credit limit and once you make consistent, on-time payments for at least six months, it may be easier to then qualify for a traditional credit card.

Elisabeth from Jonas Ridge, NC asks:

“I have multiple credit cards: bank cards, store cards and gas cards.  I would like to pay off most of them with my tax refund this year.  Should I leave the accounts open or ask that they be closed?  We will be applying for a home equity loan shortly, how will this be affected by closing accounts?  We do not plan to use the cards any longer, but I would feel better knowing we CAN’T use them.”

This is a question we get very often, which means there’s still a lot of confusion surrounding the consequences of closing credit card accounts. Hopefully the CARD Act will offer more transparency on this issue. In the meantime, know that it’s usually best to leave your credit card accounts open. Don’t volunteer to close the accounts. The reason is that your credit score factors in your credit history and the amount of credit in your name. The more history and the more credit you have, the better. Closing an account will wipe out the history and erase that line of credit in your name, which may hurt your credit score.  

Anonymous asks:

“I was wondering if you have a good credit score should you even consider those offers to “consolidate” or “reduce” your credit card debt? My husband and I have worked hard to maintain great credit. Like everyone else though, we’ve had to run up credit card debt. We’d like to reduce or consolidate, but is it going to penalize us or hurt us in the long run?”

If you have a good credit score then you’re probably in a good position to get the lowest possible interest rate on credit cards or private loans. Before getting help from a debt consolidator – where you’re likely to pay fees and take a possible hit to your credit score- try to negotiate a lower interest rate with your existing credit card company or transfer your balance to a new card with a lower interest rate. Or if you can get a personal loan from the bank that has a lower interest rate, use the loan to pay down the credit card debt.  

Ellen from New York, NY asks:

“My credit card debt is around $60k. I have 6 cards. One from Chase, I have not been paying since I wrote them a letter contesting the raising of interest rates and late payments fees. They never answered. I’m still paying off 5 other cards religiously but the Chase card that I have not been paying keeps going up. They have gone and canceled my two other cards even though I was paying them on time. They totally ruined my credit history. I’m now receiving letters from a collection agency. I lost my job and been unemployed for more than a year now. What should I do? Is there any legal recourse I can take?”

Unfortunately Ellen made a big mistake by not paying the Chase card. I understand she was upset because the company didn’t respond to her letter, but that doesn’t allow her to ignore the credit card bills without consequence. She should have called the company and spoken to a representative to try to get help. What would have been better is if she had transferred that balance to a different card with better terms but these are the lessons learned. At this point her best bet is to settle with the collection agency. She can probably settle for 50, 60 cents on the dollar, especially given her unemployment status. If she wants an advocate or further assistance, definitely visit the National Foundation for Credit Counseling.