If you’re in over your head and are struggling to keep up to date on your credit cards, store cards, car payments and or mortgage, don’t lose hope. There are several strategies you can use, to make things more manageable, while still protecting your credit score. However, ignoring the situation will certainly make it worse.
If the problem is temporary, perhaps due to illness, but your credit rating is still good, call your credit card company and ask them to lower your payments for 90 days, and also give you a lower rate on finance charges. There is a great deal of competition between credit card companies and they want to keep you as a paying customer.
If your problem is more permanent or unsolvable, if your credit is already damaged, you should consider turning to professional help to find out which options are right for you. Often, just discussing your credit problems with a professional can relieve stress and help you come up with a plan that’s just right for your current situation. Without a plan, you are drifting. With a plan, you are back in control.
That’s where we come in – many of our clients do not file bankruptcy, they simply want a plan or strategy that will help them out of their mess, and back on their financial feet. Using an attorney to call your creditors is an excellent strategy, because there are no emotions involved. No collection pressure, simply a professional negotiator working on your behalf. When creditors realize they are talking with a bankruptcy lawyer, they usually bend over backwards to accommodate our requests. Why? Because with bankruptcy lawyers, some money is better than no money, and they know that.
No debtors prisons!
If you owe money, but have no job or assets, you probably do not need the protection that bankruptcy gives you. There are no debtor prisons in America, and creditors cannot enforce a judgment, if you literally have nothing. It certainly isn’t necessary to file for bankruptcy just to get annoying collection agencies off your back either. Under the Federal Fair Collection Practices Act, you can legally force collection agencies to stop calling or harassing you, by writing to them and demanding that they stop, even if you owe them a bundle and can’t pay a cent.
However, these debts do not go away by itself, and even if you do not have a job now, you may find one later. Remember, old debts can trigger wage garnishments! In a situation like this, you may want to consider the merits of a bankruptcy. People who choose to file bankruptcy, usually do so, because they have something to protect. Money in the bank, a car, house or wages from their job. Even if you do not have current assets to protect, you can immediately begin the process of repairing your credit, since the bankruptcy prohibits creditors from continuing to report negative payment history.
Stop collectors’ calls
There is a federal law that protects you no matter where you live in America. It’s called the Fair Debt Collection Practices Act and it regulates what a debt collector can do. You can stop the Collector from ever contacting you again by sending a ”Cease all Communications” letter. This law also applies to attorneys who collect debts. Don’t be hassled by a debt collector…use the letter. It works…it’s the law! This is a simple and effective letter:
Dear Collection agency,
As per the Federal Fair Collection Practices Act, I hereby demand that you cease and desist all future communications with me. Do not call or write to me, at home or my place of employment. Failure to stop your harassment will result in a complaint to State and Federal authorities.
When you owe money and have difficulty in making payments, you have three choices:
Declare bankruptcy, Enroll in a credit-counseling program, or Disappear. Of these, bankruptcy is the only option that gives you a fresh start, and allows you to re-establish credit within a very reasonable period of time. You sometimes hear people say that it takes seven or ten years to regain your credit. Nothing is further from the truth. You can qualify for some credit cards within months of a bankruptcy discharge, and get a mortgage within three years. Until recently, some mortgage companies only required a year, but new regulations in the industry have tightened credit requirements.
There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcies erase all of your unsecured debts. You are not required to pay the erased debts, you can keep all of your “exempt assets” Chapter 13 bankruptcy is a repayment plan, often used to reinstate arrears on a mortgage over a three to five year period, or service outstanding taxes. It also stops IRS garnishments and levies.
So why do you need an attorney?
Some paralegal services charge a minimal fee to prepare and file the necessary paperwork to file a bankruptcy. While in some cases this may not be a major problem, it has been my personal experience that the risk is simply not worth it. Much of what goes into the petition comes from insight of a qualified bankruptcy attorney. Paralegals cannot see all the potential pitfalls and problems that may arise. They also cannot represent you in court. Further, if you list things incorrectly in your petition, or omit necessary items, it is your problem, not the paralegal’s. You sign all your bankruptcy papers under penalty of perjury. I know of several cases, where the debtor has had to appear in front of a judge, facing the complete denial of their discharge, pleading with the judge to help them because they didn’t have an attorney representing them. Ultimately, the debtor may have to spend several thousand dollars to remedy a situation that could have been prevented, or at least planned for, at the outset.
Call me today at 818-552-4500, and sleep better tonight.
(This article is for information purposes only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.)