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How to Settle Overwhelming Debt and Recover Financially

According to a report by CNBC, households in the United States owe an average of $155,622 in Debt in the form of mortgages, student loans, auto loans, and other obligations. While many could afford to make timely payments, some may find it difficult to settle their dues in time. Apart from the financial insecurity, it entails, being in debt also brings a great deal of distress to struggling families.

A default can also cause further damage since it dramatically reduces a borrower’s credit score, limits their financing options, and compels them to give up certain properties or items in a bid to cover the amount they still owe.

Fortunately, being in Overwhelming Debt isn’t the end of the world. Using the right approaches, it’s possible to get your debt settled without impacting your financial future. If you think you owe more debt than the average person can shoulder, here are a few things to keep in mind.

Know your options

Before anything else, it’s important to know what debt relief options are available to borrowers like yourself. If you own a company, your best course of action is to file for bankruptcy. This will stop creditors from collecting the money you still owe and seizing personal property. A bankruptcy also shields you from any legal action your creditors might take. In addition to that, you are also provided with the tools and knowledge you need to recover financially.

In case you have credit card balances to pay off, you may need to opt for a debt management plan. With this option, you will be able to reduce your debt payments and settle the balance gradually. A debt management plan can be used to settle personal loans and payday loans. On the other hand, you can choose to undergo debt settlement. As an alternative to filing for bankruptcy, a debt settlement allows you to reduce your debt and pay the remaining amount in full.

When choosing a debt relief option, you need to consider your current financial situation and determine which option will give you the best advantages.

Know the risks

Regardless of the option you have chosen, settling your debt comes with numerous risks. For instance, filing for bankruptcy won’t look good on your credit report. In many cases, lenders may require higher interest fees if you are planning to apply for a loan in the future. There is also a good chance that they will thumb down your application. Other than that, you are not allowed to file for bankruptcy again for a certain period.

A debt management plan, on the other hand, will not eliminate your debt and prevent creditors from collecting payments. You also get a longer repayment term and you may need to close your credit accounts so you won’t be taking any more debt.  If you are opting to negotiate your debt through a settlement, there’s a good chance that creditors will opt out of your debt if they dislike the terms.  You will still need to pay taxes on the reduced debt and a settlement fee that could cost you thousands of dollars. If you are looking for financial relief, there’s a price you will need to pay to remove such a burden.

Know when to get legal advice

When you fall into overwhelming debt, creditors may use legal (and, at times, unethical) ways to make you pay your dues. They may threaten you with a lawsuit or barrage your email or voicemail inboxes with reminders. When either of these happens to you, getting a debt collection attorney will help make your situation manageable.

Knowing the pros and cons of each debt relief option you have on the table, you need a lawyer who can help you decide which of these offers fewer risks. A lawyer can also represent you during a debt settlement negotiation, provide legal remedies if you are being harassed by aggressive creditors, and give you enough breathing space to recover financially.

With the right professional by your side, you can build the right legal defenses against creditors that set unjust deadlines, serve complaints at irregular times and violate debt collection laws such as the Fair Debt Collection Practices Act. Your lawyer can also work against collectors that threaten to file a lawsuit even though the Statute of Limitations for doing so has lapsed.

Make sure to get a lawyer that has worked with credit card companies, banks, and lenders in your state. If you are faced with overwhelming debt in Florida, you can always look for a debt defense lawyer in Fort Lauderdale or Miami who can help you on the path to financial recovery.

Having overwhelming debt can be too much for anyone, so you must know what legal options to take to save yourself from long-term financial trouble.

The post How to Settle Overwhelming Debt and Recover Financially appeared first on Find US Lawyers.



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