Debt relief can be hard to achieve when a job is lost and a new one can't be found quickly. High interest credit card debt can be difficult to deal with when bills pile up and the minimum payments can't be made. There are free resources to help debtors when it doesn't seem possible to get out of debt. There are legal aid organizations that can offer some assistance. Free debt help can also be found online. Many websites offer help with debt in the form of advice on the blogs and forums from people who have been in a similar situation. If some web sites don't offer direct information they may show where to get it. In many cases where a lawyer might be too expensive, it is possible they may offer some information or tips. Free debt help might also be possible from family members or friends who may be in a similar situation or know someone who is.
Regardless of income or ability to pay, there are many options for dealing with bad debt. A debt settlement can be reached sometimes if the debtor and creditor come to an agreement about the terms of repayment. In some cases, it can lead to debt reduction if the creditor agrees to an amount smaller than the original debt. Negotiation and counseling can also be options where new payments are rearranged and recovery is possible. Debt elimination might be possible through bankruptcy where the debt is reorganized or discharged altogether. Bankruptcy protection occurs automatically after filing when the debtor is granted an automatic stay.
After a job loss, illness or other situation that causes a financial crisis and payments on debt become too difficult to make, the debt may go into default status. In the case of credit card debt, it may be charged off and sold to debt buyers. When the debt first becomes delinquent, debt collectors usually start to call and send letters. Some of them may become abusive and harass the debtor by trying to cause embarrassment and shame or even threaten violence. If this happens they are breaking the law according to the Fair Debt Collection Practices Act. Debt collectors are restricted to the things they can say and the actions they can take when dealing with a debtor. The Fair Debt Collection Practices Act is available online for free. Debt help might be more easily acquired from a lawyer or attorney who specializes in consumer or debt law if the FDCPA has been violated.
Just before or right after a debt is charged off and if the credit card company has not made successful efforts to collect the debt, the creditor might either not pursue the debt, file a lawsuit or sell the debt to a debt buyer. More often than not, the latter option is preferred. The original creditor will sell the debt to a debt buyer for pennies on the dollar. The range seems to vary between 20 cents if it is fresh debt recently charged off to less than a penny if the debt is near or past the statute of limitations of the state where the debtor incurred the debt. The debt buyer is more likely to sue a debtor than the original creditor even though the debt buyer does not receive important documents such as the credit card agreement. The contract for the loan is important for the plaintiff to prove its case in court. Even though a debt buyer is less likely to win without the crucial evidence it is still more likely to file a lawsuit. If the creditor proves its case, it obtains a judgment against the debtor.
In the case of judgement, the debtor becomes known as a judgment debtor and is subject to more severe debt collection measures. Some of these include attachment and execution where the debtor can have their bank accounts seized to wage garnishment and even jail in some cases.
There is always bankruptcy, however, as long as there was no preceding bankruptcy recently. The time between bankruptcies varies according to the whether it is chapter 7 or 13. One benefit of entering bankruptcy protection is the automatic stay where litigation against the debtor is halted. The debtor has the option in some states of choosing state or federal bankruptcy laws which grant special property exemptions. The debtor can fill out the bankruptcy forms for free or hire a bankruptcy attorney to appear in court. Bankruptcy lawyers will charge less than 1,000 dollars in some cases depending on the lawyer. Credit card debt relief can provide a new lease on life after bankruptcy.
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