When you don’t pay all of your bills, the lenders first start their collection efforts with calling you and asking for payment. When phone calls don’t get the payments going again, most creditors send a written demand for payment, with a deadline by which payment must be made or further action is threatened. That further action usually comes in the form of a lawsuit, eviction, or foreclosure. If you fail to respond to these actions, when required to do so in Court, the lender can get a judgment against you. Once a judgment is entered, collection efforts become more serious than letters and phone calls. If your creditors know where you work or where you bank, you might see your wages or bank account garnished. And, if you are a homeowner, it is possible that your lender will put a lien on your home. This makes it impossible to sell or refinance your house, without first paying off that lien.
None of the above sounds like fun, and that is because it is not fun. If you are in danger of being sued for a past due debt, you do have options. One option is to file bankruptcy, which will stop any legal action that is currently pending against you. During a bankruptcy, you also get the benefit of the following:
• In a Chapter 7, you can eliminate all of your unsecured debt. This means you will no longer have to pay high interest rate credit card debts, and other unsecured debts.
• In a Chapter 13 you are allowed to reduce the interest rate and balance due on your car loan, and you are also permitted to repay only a portion of what is due on your unsecured debt. Many times the portion repaid is pennies on the dollar, resulting in significant savings.
• When your bankruptcy is over, you will be on new financial footing and given a fresh financial start. For many people this new beginning is all it takes to get their finances in order, and keep them under control.
If you are hesitant to file for bankruptcy, you might consider having a trained bankruptcy and debt management attorney work out other payment arrangements with your creditors on your behalf. It is not uncommon for a trained legal professional to work out a deal whereby you pay less than what is owed, all while avoiding costly litigation against you.
For more information about how to manage debt, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.