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Protecting Your Assets When In Debt

Protecting Your Assets When In Debt
"""If you are having difficulty paying your obligations, you may have received notice that your assets are at risk of being seized by your creditors. Missed mortgage payments can rapidly result in foreclosure, and missed car payments can lead to repossession. If you are severely delinquent on your debt obligations, creditors may garnish your wages. However, you do not have to allow creditors to seize your assets; there are methods to safeguard your property while you work to catch up on your debt payments.


In comparison to other creditors, mortgage lenders pursue collection actions much more quickly. The reason for this is because the loan amount is significantly larger and they lose money rapidly when payments are missed. If you are behind on your mortgage payments and want to retain your home, you have two options.

First, you can directly negotiate a mortgage loan modification with your lender. A loan modification can alter your mortgage loan's provisions, resulting in lower monthly payments. Lenders may be willing to reduce the loan's interest rate, waive delinquency fees or penalties, extend the loan's term, or even temporarily suspend monthly payments.

The second option is to declare bankruptcy. When you file for bankruptcy, the foreclosure process is suspended or prevented, and your lender must give you time to work out a repayment plan with the bankruptcy court. Depending on the state in which you reside, your home may be entirely protected against seizure in a Chapter 7 bankruptcy case, or you can ensure full protection by repaying your mortgage debt in a Chapter 13 bankruptcy case.


Secured debt lenders, such as car loan lenders, have more collection rights than unsecured creditors when attempting to collect a debt. The reason for this is that the property you own serves as collateral in the event that you default on the loan. There are two methods to halt or prevent repossession in the event of payment default.

First, you can negotiate directly with your creditor. Your creditor may be willing to halt repossession proceedings while you work to catch up on payments. Nonetheless, you must contact your creditor as soon as a payment is missed. If you contact the creditor too late, you may be unable to negotiate a bargain, and the property may already be in the process of being repossessed.

You can also file for bankruptcy to halt or prevent repossession. Again, the state in which you reside has specific exemption laws governing the quantity and type of property that is exempt from seizure during bankruptcy.

Wage Garnishment

Creditors only resort to wage garnishment as a last resort because they must first obtain a court order. Wage garnishment may result in 25 to 50 percent of your wages being garnished from each payment, worsening your financial situation. The good news is that there are two ways to avoid wage garnishment.

Initially, convey your financial situation to your creditor. You may be able to negotiate a more budget-friendly repayment plan.

In most cases, bankruptcy can prevent your wages from being garnished if you lack the financial resources to maintain an arrangement with your creditor. However, child support and tax arrears are rarely eligible for bankruptcy protection and may continue to be garnished by court order.""

" - https://www.affordablecebu.com/

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"Protecting Your Assets When In Debt" was written by Mary under the Finance / Wealth category. It has been read 65 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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