Hello World! Welcome Friends! In order to figure out what to do with your debt, you need to take a look at your financial situation. First figure out what types of debt you have, decide which debts you should repair, learn more about wage garnishment limits, determine whether there are exemptions to protect your property, and determine if your financial difficulties are long term or short term.
What Kind of Debt Do You Owe?
The type of debt you have will determine what creditors are allowed to take and how much time it takes to pay down your debt.
Secured Debt: Any secured debts, such as car loans or mortgages, give credits rights to collect from property that you have used as collateral for the loan. If you don’t pay this debt, then the lender can repossess your car or foreclose on your home.
Unsecured Debt: If you have unsecured debt, such as most credit cards, then a lender will typically need to file a lawsuit against you before it is able to take collection action. Once the creditors have a judgment then they can place liens or garnish wages.
Government Debt: Government debt, such as student loans or taxes, is unsecured debt but it also gives creditors special collection rights. The government is able to garnish your wages or take your tax refunds without filing a lawsuit.
Is Your Situation Long Term or Short Term?
If your financial trouble is short term, then you could be able to get back on your feet and have some time to catch up on payments or get a temporary reduction in payments. If your situation is long term, then you will likely need a permanent solution in order to eliminate or reduce debt. Filing for bankruptcy or debt settlement could be more appropriate.
Focus on the Debts You Should Repay
Some debts are going to be more important to pay than others. The high priority debt is the secured debt with the collateral you want to keep, such as the car or house. Certain unsecured debts are also important, such as child support and utility bills. You don’t want to focus on low priority debts unless you have already paid the higher priority ones, even if you want to stop collection calls.
Different Options You Have
No matter how much debt you have and your financial situation, you do have different options.
Do Nothing
Typically, you only have this option if you are judgment proof, which means that even if your creditors sue and get a judgment, they still won’t be able to collect from you. In order to be judgment proof, all your debt is unsecured, all of property is protected, your income can’t be garnished, and your financial situation is permanent.
Negotiate with Creditors
You could get some debt relief if you negotiate with your creditors. You could reduce mortgage payments with loan modification or forbearance. You might be able to lower interest rates on credit cards by reaching an agreement with the lender. In some cases, if you settle debt for less than you owe then your cancelled debt is taxable. You should work something out with each of your creditors because every creditor can still sue you and negate the benefit that came from successful negotiations. If this seems like something you would be unable to do without assistance, you can always get in touch with a debt relief company who will be willing to help you through negotiating your debt – if you would like more information about these companies you should consider reading this review of National Debt Relief.
Help Using a Credit Counseling Agency
If you aren’t able to work out a solution with your creditors on your own, then you can get help from an accredited and reputable credit counseling agency. If you are paying an agency to help with debt problems, then you are spending money that should be going to your debts. Learn what the counseling agency charges and if it makes sense. If you are paying more for help than what you save, then you are just adding to your debt.
Apply for a Student Loan Payment Plan
If student loans are the majority of your debt, then there are options available to you. The options will be based on what type of loan you have. One such option is a refinancing program such as Earnest student loan refinance, as it offers competitive rates and unique perks that can help student loan borrowers save money.
Get Help from Family
Getting assistance from a loved one is usually a short-term option, but it could be easier to get help if you already have a plan in place to deal with your debt. Your family may be willing to help you pay attorney fees for bankruptcy in order to move forward instead of just helping you every time you fall behind on debt payments.
File for Bankruptcy
There are different scenarios where filing for bankruptcy is the best option, even if it is a last resort. If you need to stop wage garnishment, need time to catch up on secured debt, or can’t reach agreements with creditors, it could be your best option. Do your research and look for a professional and well-reccommended bankruptcy lawyer in Harrisburg PA or area near you. There are two types of bankruptcy to consider. Chapter 7 helps eliminate debts you have but not everyone will qualify. Chapter 13 bankruptcy sets you up with a plan to pay back your creditors.
Pay Attention to Scams
When you are in a tough financial spot, you are vulnerable to collection tricks and debt relief scams. Falling for scams can increase your debt load so it’s important to always do your research and consult with a lawyer on your options.
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