What Is Debt Negotiation?
Debt negotiation is an effective debt reduction tool that most people should take advantage of. Generally, if your secured and unsecured debt payments exceed a third of your income, these debts are impossible to repay. Something has to give. Several recent Supreme Court decisions have watered down consumer protections in the Fair Debt Collection Practices Act and elsewhere. As a result, creditors are more aggressive, and judgment day comes quicker than ever before.
Usually, bankruptcy is the best option in these situations. This federal debt relief program enables families to retake control over their own financial situations. Sometimes, a Chicago debt negotiation lawyer talks with creditors and obtains more favorable repayment terms. Good negotiators, like attorneys, know that two things are almost always true. Everything is negotiable, and you don’t get anything unless you ask.
When debtors fall behind on home mortgage loan payments, set relief is usually available, in the form of a loan refinancing or loan modification. Unsecured debts, like credit card debts, are much more subjective.
Loan refinancing, especially if market conditions are favorable, could be the answer to delinquent mortgage issues. Most banks have requirements for second mortgages, including credit score requirements. Fortunately, federal laws are a little different in this area. So, if a homeowner doesn’t qualify for refinancing, a Chicago debt negotiation lawyer can usually change that outcome.
Mortgage loan modifications, which are basically payment deferrals, are available as well. However, the process is extremely complex. Refinancing usually involves a single application, The mortgage modification process could take months or even longer.
Attorneys help homeowners understand their mortgage modification options. Not all homeowners qualify for all modifications. Furthermore, attorneys handle negotiations with bankers.
As mentioned, unsecured debt negotiation is much more subjective. An attorney doesn’t need to change the world during these negotiations. A small change, like a few tenths of a point off an interest rate, makes a big difference, especially over time.
Debt Negotiation and Bankruptcy
Frequently, attorneys can negotiate bankruptcy-type relief without a filing. For example, a creditor might agree to suspend a wage garnishment order while the creditor and debtor renegotiate the debt. Fundamentally, the creditor doesn’t want to garnish the debtor’s wages. The creditor just wants the debtor to pay.
This negotiated solution may be enforceable in court. According to film magnate Samuel Goldwyn, oral contracts aren’t worth the paper they’re printed on. Gioldwyn was a great filmmaker but a terrible lawyer. Oral contracts are every bit as enforceable as written pacts. Oral agreements are simply harder to prove in court.
Additionally, many debt negotiation lawyers use the threat of bankruptcy to obtain more favorable repayment terms. The debtor may not want to file bankruptcy or even qualify for this form of debt relief. But the creditor doesn’t know that. So, this threat, even though it’s an empty threat, is often effective.
Connect With a Thorough Cook County Lawyer
No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters throughout Chicagoland.