You might be in debt because of medical bills, a divorce or because you lost your job. Or perhaps you just didn't realize you were spending so much on your credit cards month after month. In any case, you now have a pile of bills to pay and no way to cover them all. You're not alone if you're facing credit problems and foreclosure, because more than one million homes were foreclosed in 2010, according to Reuters.
Be Realistic
It took you months, if not years, to get in financial trouble so don't expect your problems to quickly go away. Look at your income and all your expenses. If you're so far in debt there is no way to catch up, you have to face it, and the sooner the better. Prioritize your expenses. You must have food on the table and a roof over your head. Most likely you'll have to keep the electricity and water turned on, along with the telephone and heat. Those expenses must be paid. If you're paying child support, that must be paid as well.
Take Action
Ignoring the debt collectors' phone calls, late notices from your mortgage company or legal proceedings won't do you any good. In fact, you may have liens placed against your property and belongings or your wages and bank accounts garnished if you don't respond in the legally correct way to any court proceedings. Contact your creditors and see if you can work out a payment plan. If you have the cash, it may be possible to settle your debts for as much as 50 percent less than what you owe.
Stop the Foreclosure
Depending on your state, there are ways to legally stop the foreclosure proceedings. You might be able to short sell your house, which means selling it for less than your mortgage with the mortgage holder agreeing to accept that sales price as payment in full. If Fannie Mae insures your home mortgage, there is a good chance that the mortgage lender must negotiate with you, according to makinghomeaffordable.gov. While that negotiation is going on and your application is being considered, the foreclosure is stopped.
Consider Bankruptcy
It's a last resort, but bankruptcy is an option to stop wage garnishments, legal proceedings, collection activities and foreclosure. It will not relieve you of back child support or the obligation to pay off school loans, but most other debt will be absolved. Keep in mind if you have secured debt, such as a car loan, the car will be repossessed. There are restrictions on whether you can declare either Chapter 7 or Chapter 13 bankruptcy based on your assets, income and wages.
0 comments:
Post a Comment