All the information, articles, and tools that you need when facing debt and bankruptcy!
Tuesday, January, 6th, 2009
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All the information, articles, and tools that you need when facing debt and bankruptcy! Tuesday, January, 6th, 2009 |
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Debt Questions And Answers Q: What are the signs of being too far in debt?A: Most Americans are in debt. What constitutes too much debt depends on personal circumstances. The first sign most of us get that we are to far in debt is being unable to pay all the bills on their due date. Juggling payments is a sure sign that you are in or heading towards debt problems. Other sure signs: even a one day loss of pay forces you to charge food or gas, you put off a vacation because you didn't get the expected overtime, or fighting over money has become a full-time experience in your home. Q: If I lose my income what do I do? A: Before anything else, notify your creditors and explain you lost your job. If it is a temporary layoff or you expect to have another job soon, tell them. Then ask for any way to protect your credit and continue to pay on your debt. They may offer, or you can ask for, a waiver on payments for a couple of months until you get a regular paycheck again. At least ask to get a reduced payment. Banks may let you make a partial payment on your mortgage and add the skipped interest payments to later payments. Remember to ask your creditors not report you as long as you continue to pay at the agreed rate. If all else fails and your creditors will not give you a break, consider selling assets like a car. Unfortunately, this will not improve your long term problems caused by the loss of earnings. However, if you own the car outright, or you can sell it for what is owed, and it is a second car, this may be the only solution to your short term debt problem. Q: My bank reported my to the credit bureau because I was late in two credit card payments due to a layoff. What can I do? A: I assume that you found this out when you applied for some type of credit. All consumers are allowed one credit report a year. Get it before you apply for any credit. Read it carefully especially any notes attached by a creditor. In this case, you can write the credit bureau and ask them to include a statement explaining why you missed the payments and give it to any creditor who asks for your credit rating. When you apply for credit again, tell them about the bank's reporting you and your side of the story. It may just get you that loan and a reduced interest rate. Q: What can I do if my credit report contains false information? A: Immediately write to the credit bureau that has the incorrect information and explain fully why the information is incorrect. Get a return receipt from the Post Office. The bureau by law must investigate and respond to you. If not, contact the Federal Trade Commission and file a consumer complaint. Q: How long does bad information stay on a credit report? A: Usually seven years. I say usually because each state can set their own limit on bad credit information. Some states allow a report of a judgement against you to stay on your credit report for up to 21 years. Most bankruptcies are removed after 10 years but again it is up to state law and the credit bureau. Q: What about "credit repair" companies? A: Save your money. Only time will repair your credit. That and keeping your credit report clean of any new missed payments or defaults. Q: What can I do about collection companies and other debt collectors from harassing me? A: Collection agencies are in the business to get you to pay, any way they can. Do they cross the lone? Every day. To fight back, use the Fair Debt Collection Practices Act. Read it and see if they have done anything illegal. If they have file a complaint with the Federal Trade Commission. If not, you can still write them (certified mail) and ask that they stop calling you. However, this will force their hand into other action such as going to court. Q: What can happen if I co-sign a loan? A: In the eyes of the law, the co-signer of a loan is just as responsible for payment as the person that got the loan. In plain English, if that person refuses to make payments, the bank isn't going after him, they will be coming for you. After all, they knew that the person getting the loan was a bad risk. That's why they asked for a co-signer. And they know they have a much better chance of getting you to pay. You have a good credit rating and you want to protect it. Q: A creditor is threatening to take some of my property in payment. Can he do that? A: Yes. Even though the creditor has no claim to the property (a lien or it is the property the loan was given for) he can go to court and file a judgement lawsuit against you. If he wins, he can attach some types of your property for payment. This means, if the judge agrees, that he can get the sheriff to seize the items and sell them at auction. The creditor gets to keep all the profits up to what is owed. You get the rest. Q: Can a creditor really garnish my wages like he threatens? A: Yes. As above, the creditor gets a judgement against you and asks the judge for a garnishment of your wages. A letter is sent by the court to your employer asking that so many dollars betaken from your pay each pay period and sent to the court. Each state has different laws governing garnishment. So if you are facing such a situation, read your state law and find out how much of your pay check can be garnished. Most states limit the amount garnished to leave you what they consider enough to live on. Don't ignore the court action. It is your only chance to fight the garnishment or make the payments something you can survive. Q: Is bankruptcy really a good answer to my debt problems? A: With out knowing your specific situation that is a hard question. Normally, I would recommend bankruptcy only when other efforts have failed. By other effort I mean a real budget, trying to work with your creditors, and selling of unneeded assets such as boats or a second property. If these have failed or are not an option, I would then recommend using a debt counselor or debt consolidation agency. If the counselor can find no new ways that you haven't already tried, then a debt consolidation agency should be able to lower your payments to something you can afford. If your situation is truly critical, monstrous medical bills, loss of work with no employment in sight, then and only then, consider bankruptcy. Q: What are my options in bankruptcy? A: Most personal bankruptcies are Chapter 7 proceedings that are designed to cancel any debts you list in the filing. Not all debts can be eliminated by bankruptcy. Child support and alimony are two that can't be considered. Also, don't bother the judge with the bills from that expensive vacation you took last year. It will irritate the judge and you may find that your bankruptcy hearing turns into a judgement against you. With that goes the fact that the judge may release you from all the debts you filed or only part of them or none if it is felt that you have the ability to pay. Q: Are there any other legal options besides full bankruptcy? A: If you feel that you could pay back all you owe if you only could do it over a longer time at with smaller payments, a bankruptcy judge may approve what is known as a wage earner's plan. However, this is really nothing more than a legal ruling putting you into a debt consolidation plan. It may be better to use a debt consolidation service instead of going to court. The judge can rule against you.  |
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