When you have gotten yourself into a problematic financial situation and see your debts piling up, with no way that you can think of to pay them, you may find yourself feeling stuck or trapped in an impossible situation. While it may be tempting to just bury your head in the sand and avoid thinking about or dealing with your past due debts and creditors, this is perhaps the most problematic and ill-advised thing you can do in the situation. Become familiar with some of the aspects of dealing with past due debts that you should keep in mind before the situation gets even more out of hand.
If You Avoid Your Debts, They Can Sue You
While not all debt management companies will resort to such extreme measures, there is a chance that if you ignore and avoid your debts for too long, that they could turn around a file a suit against you in a court of civil law. Essentially this means that the debt company does not think you will pay the debt on your own and wants the state government to enforce the repayment of the debts in question.
When you are sued for the repayment of debt, you will (of course) have a court case on your records. You will also run the risk of the judgment against you causing the government to garnish your wages, seize property, and otherwise make your financial life even more difficult than it already is.
To avoid this, you should stay in contact with the companies that hold your debt. You may be able to come to some sort of arrangement that will allow you to make smaller, more manageable payments toward your debt rather than have the courts take the money from you. This will help you avoid a court loss on your record and further financial struggles.
Consider Filing For Bankruptcy
If you do not believe that you can pay your debts as they are, you may want to consider filing for bankruptcy. Filing for chapter 7 bankruptcy, for example, will discharge eligible debts, freeing you from the burden of paying them outright.
This can mean, however, that you need to forfeit property in order to help pay off that debt. And it is important to remember that student loan debt and some other debts may not be eligible.
Chapter 13 bankruptcy is another option to consider. When you file for chapter 13 bankruptcy, you will still need to pay your debt, but make specific payment arrangements with the courts so that the debt will be repaid within three to five years and will not cause you undue financial hardship.
Now that you know a few of the factors to keep in mind when you are dealing with past due debts, you can better handle the situation and get your finances back on track as soon as possible.
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