Consumer Debt: Struggling to Pay Bills
Consumer Debt: Are You Struggling to Pay Bills?
If you owe a debt that you can’t pay, it’s important to deal with it right away. Don’t procrastinate! The longer you take to deal with it, the more expensive the problem will become, and in the end, the only option left to you could be bankruptcy.
Not Paying Leads to Late Fees
When you stop making your monthly payment on any debt, late fees will start to accrue. After a few months of not paying, a debt securing personal property will officially go into ‘default’ which means you have breached your contract with the lender, entitling them to demand the full balance of the debt at once or the return of the collateral securing the loan. In some circumstances, such as with an auto, secured creditors can repossess the collateral at this point without giving you notice that they intend to do so. Once you have reached the stage of default and/or repossession, you cannot get your property back or reinstate your contract with the lender without paying not only the amount you owe on the balance, but also, attorney’s fees, late fees, and reasonable costs of repossession (when applicable).
Unsecured Loans and Debt Settlement
If you are able to pay some of what you owe on an unsecured loan, but cannot continue to make the monthly payments, it is similarly important to act fast. It may be possible to settle your debt with the lender for pennies on the dollar if you have cash to pay a lump sum at once.
Potential Lawsuits and Wage Garnishments
If you wait for the creditor to sue you to collect the money, you can still try to negotiate with the lender but now you will have to contend with attorney’s fees and court costs associated with the lawsuit. These amounts become part of the debt that you owe once your creditor has to retain an attorney or file suit against you to collect. If your creditor gets a judgment against you, the creditor can then seek garnishment of your wages or bank accounts or ask the court to have the sheriff come to seize your property to sell for distribution to the creditor. While some property is exempt from garnishment and execution from creditors, up to 25% of your wages and equity in most personal property will not be protected. Also, once a creditor gets a judgment and order for garnishment or execution, they will not settle with you as long as they can collect the full balance from your personal property or wages. They have absolutely no incentive to work with you once they get this far down the road.
Bankruptcy Attorney and Consumer Counselors
If you are unable to pay your debts, talk to an attorney or consumer counselor about your options and develop a plan of action as soon as possible. The good news is that most people can still file a chapter 7 bankruptcy even at the point of garnishment and get a fresh start, but bankruptcy may not be necessary if you act fast and deal with your creditors head on.
We offer a free consultation with our consumer debt attorneys.
If you have questions or would like to learn more, please visit our consumer debt protection attorney services section. We are waiting to assist you.