In these days of economic downturns, many people have discovered that their comfortable lives could well be taken away from them. Debt which spirals out of control sometimes gets the better of a lot of people and when this happens it is time to seek advice from a bankruptcy lawyer to see what can be saved and what has to go for sure. Indeed, putting 'stop foreclosure' into any search engine will show how many companies are now involved with this kind of problem.
What most people do not realize is that debt can become so great that creditors will demand unreal payment plans. They really do not care if the debtor has problems like medical emergencies or car accidents which have to be taken care of first. Their only priority is to make as much interest on the initial amount borrowed and that is that.
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The worst thing that anyone can do when they realize that they cannot pay creditors is to do nothing at all. They should contact these companies and let them know that they are having difficulties as soon as they are seen so that payment plans can be restructured or delayed a little to let the debtor get back on his feet. However, there are companies which are just not sympathetic no matter what happens.
So debtors do tend to shy away from asking for help from the creditors and this is where problems begin to go from bad to worse. Another bad way to try to solve the problem, perhaps with credit card debt, is to get another card to pay off the first. This will result in more and more interest being added which makes the problem much worse than it needs to be for sure.
When it comes to mortgages and business premises, many banks will try to help as much as possible if the economy is declining. After all, even if they repossess the premises or house, what are they going to do with it when the housing market is shrinking? They may even have to sell the property at a loss which rather defeats the whole object. Refinancing or delaying mortgage payments may be an option as long as they are told up front that there is likely to be a problem in the first place.
For credit card debt which has got out of hand, many will opt for the Chapter 7 clause in the courts which could see the debt wiped out completely depending on the circumstances. However, there is a means test which has to be applied which some people find totally demeaning for sure. If the debtor has some excess cash coming in each month then the court may just go for Chapter 13 which means that all the debts are consolidated and paid back in reasonable amounts over a set period. No interest charges or late payment penalties can be added and the debtor has a breathing space with no creditors harassing them or contacting them by phone or letter anymore.
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