When you have more month than money, or financial obligations that are much bigger than your income, borrowing is the next best solution. Once your borrow money, this debt becomes a financial obligation and you have to repay what you owe based on your agreement with the creditor or lending party. Your legal obligation based on the contract signed between you and the creditor is to pay the amount you borrow plus the set rate of interest over a specific time. If you fall behind on your payments, or cannot make them altogether, there are a couple of things you can do about your debt.
Communicating with creditors
You can negotiate with your creditors for a solution if you are in financial trouble. Some creditors may even be willing to refinance the loan if you notify them early enough about your financial troubles. Either way communication is key to handling any kind of debt situation with your creditors to avoid a lawsuit.
Both creditors and debtors have rights and obligations in loan agreements. The creditor has the right to recover the money they lend you through the correct legal processes. Creditors are not allowed to intimidate or harass debtors while trying to recover their money. In case you have fallen behind on your payments, the creditor has to serve a default notice in order to initiate the debt recovery. This notice is what outlines your failure to adhere to the terms and conditions of the loan agreement. The creditor should allow you at least 30 days after this notice to resolve the debt before taking any other legal action against you.
Debt relief is one of the ways through which you can get out of debt if you have received debt noticed from your creditors but you are financial unable to pay back what you owe. Debt relief specialists place you on a specialized program geared towards stopping the growth of your debt and reducing it to an amount that you are able to pay out of your income. It is advisable to know more about debt relief before choosing this option. You need a very good debt relief agency that will have your best interest at heart in order to resolve this matter.
The creditor may choose to repossess an asset in order to cover the cost of the loan in default. For instance, if you bought a car through financing by a dealership and you are unable to make your payments, the dealership may repossess the vehicle. The same applies for mortgages and homes or any other loan that involved asset security. However, creditors can only initiate this repossession if you have 25% or more to repay on the principal amount that you borrowed. They cannot access your assets if the repayment due is less than 25%. The creditor also has to obtain a court order to enter if the asset is on private property.
Brody Miles is a debt relief attorney who helps individuals and small businesses handle legal financial issues. You can visit his blog to know more about debt relief and how to handle your debt problems.