How to Clear Old Debts

Sometimes we struggle and sometimes we lose it all, but at some point many of us wonder if it would just be easier to start over with our financial lives and do things better the second time around. Wiping the slate clean is expensive in terms of legal fees and a huge hit on your credit rating. You might not be able to get a bank account for awhile and buying a house or car in the following years would be near impossible, but if you’re ready to pull your hair out, it might be time to throw in the towel.

Bankruptcy

Your first step is to start bankruptcy proceedings. Learn how to declare bankruptcy and begin working through the required steps. You might be forced to try setting up repayment plans for your debts. If you can find a system that works, you’ll be better off in the long run paying off something rather than wiping it all away, but any form of bankruptcy will be a huge hit on your financial life.

Stop Collections and Foreclosure

Once you’re in the process of declaring bankruptcy, speak with your lawyer about stopping other negative proceedings such as repossessions, foreclosures and the many collection calls you might be receiving from unpaid creditors. Figuring out how to stop collection calls alone might bring you peace of mind just because the phone will stop ringing while you work to find a solution.

While there are legal means to put foreclosures and collection calls on hold, you won’t be able to do away with them forever until you work out a repayment plan or formally discharge a bankruptcy and wipe away all your debts.

Starting Over

Once you’ve set up a repayment plan or have had everything wiped away, you’re free to start over. You won’t be able to get credit for a long time, but that is okay as you don’t truly need it to pay bills and live a happy life. Find a bank willing to work with you and deal with cash. Pay your bills on time and don’t give in to the temptation to borrow money. When you start feeling the urge to buy something on credit, learn to walk away. You are one of the few who is able to truly start over, you’d do well to make this a truly good start.

Easy Step By Step

• • Organize your debts and financial obligations to get a clear picture
• • Speak with a bankruptcy lawyer to make a plan of action
• • Use legal proceedings to stop collection calls, foreclosures and repossessions
• • Keep your financial transactions clean going forward

Warnings, Advice, and Suggestions

Bankruptcy should be a measure of last resort. It’s become harder to wipe away debts through bankruptcy in the last few years, so do what you can to negotiate payments with your lenders before resorting to formal bankruptcy.

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How to Avoid Foreclosure

Foreclosure is rarely something a homebuyer expects to encounter (excluding those who knowingly buy a home never intending to make payments), but when you’re unable to pay your mortgage, foreclosure becomes a very real, very scary possibility. Avoiding foreclosure is essential to not only keeping your credit rating half-way decent, but also to keep your home.

The Notice of Default

When a mortgage company feels you’ve missed too many payments, it will file a Notice of Default. Once this notice is filed, the foreclosure proceedings have begun. If possible, you should do all you can to avoid having the Notice of Default filed in the first place. When you see things starting to unravel in your financial world due to any number of circumstances, you should take action immediately. Consult with a real estate lawyer to give you all of your options, but at the very minimum, talk to your mortgage company rather than ignoring letters and calls from the company.

In many cases, if you’re proactive and know your options, you can find a working solution with your mortgage company. The company would rather keep your payments coming in, even if they are a bit different than originally planned, to continue making money from your loan. To this end, the bank will likely work with you to refinance your home if possible, adjust the interest rate on the loan to lower your payments, revise the payment terms, such as allowing you to pay less now and more later to balance the hard times, or even forgive a missed payment if you can start making payments again now. The only way you’ll know what your options are is to seek the help of your mortgage holder and possibly the assistance of a real estate lawyer who can show you other possibilities.

When You’re In Foreclosure

Once you’re in foreclosure, you absolutely should consult with a lawyer or a real estate law firm to find the best solution from your available options. You can stop foreclosure on your home by selling it through traditional methods, through a short sale, which will need to be agreed upon by the lender, or by signing the house over to the mortgage company in a deed-in-lieu of foreclosure agreement.

The best option is to sell your home and use the profits to clear the account, but if that is not possible, a short sale, which is a way to sell a house worth less than what you owe, might be an option. It would hurt your credit, but not as much as a foreclosure or deed-in-lieu agreement.

Easy Step By Step

• Contact your mortgage company when you’re not able to make timely payments
• Try to negotiate a resolution that gets you back on track before a Notice of Default is filed.
• Find the funds to reinstate your loan if possible
• Sell your home to settle the debt

Warnings, Advice, and Suggestions

Foreclosure and financial troubles can be emotionally staggering. Don’t let negative emotions such as embarrassment or fear get in the way of a solution. Be proactive and work hard to find a solution with your mortgage company. In most situations, they would like to work with you to keep your family in your home.

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