Being in debt proves stressful enough on its own but owing a debt in the middle of a pandemic can throw debtors into a downward spiral with no end in sight. While many Americans enjoyed a reprieve from debt collection practices during the height of the coronavirus pandemic, several of those programs remain scheduled to expire in the coming months.
Fortunately, there are steps anyone carrying debt can take to reduce fees, interest, and their overall balance. Some are simple things you can do on your own. Others require the help of a skilled attorney.
At Siddons Law Firm, we’ve helped struggling debtors for well over a decade with debt settlement, bankruptcy, and creditor lawsuits. Our experienced legal team will be there if you have any questions or need legal representation.
In the meantime, we’ve put together this helpful guide for handling debt settlement during the coronavirus pandemic.
Contact Your Creditor
If you’ve fallen behind on your debt payments or believe you may not be able to pay them in the future, call your creditors. Although calling your creditors may seem a little scary, it allows you to inform them about your situation before you miss any payments. They’ll appreciate your proactive approach to debt management and may have some options to help you address your balance.
Check Alternative Forms of Communication
Many debtors have experienced difficulty reaching their creditors during the pandemic. Unemployment and inflation have caused a marked increase in defaults, creating a customer service nightmare for many creditors and debt collection companies. Many consumers report long wait times on the phone and some even express the inability to reach their creditors at all.
If you’ve experienced difficulty when trying to call your creditor, consider using other forms of communication. Many companies will respond to you via email, text, or even live chat. Not only do these methods prove effective at reaching creditors, but they also present a less stressful mode of communication. Of course, you should know what to say before you make contact.
What to Say to Your Creditor
If you do get in touch with your creditor, you should have already planned out what you intend to say. The representatives that work for your creditor or debt collection agency intend to collect on your debt, but they also want to help you devise a plan for repayment. If you’ve contacted them before you even missed a payment, then they’ll feel more obliged to assist you. Be honest and polite.
There’s another important reason to contact your creditor, as well. To qualify for certain hardship programs, you must make contact before any missed payments. Hardships programs can sometimes allow you to:
- Delay payments
- Adjust payments
- Avoid damage to your credit score
- Stop the accrual of interest charges
Ask About a Payment Plan
If you remain current on your debts, your creditors may work with you on restructuring your payment plan. Payment adjustments might include smaller payments, a longer term, and/or a reduced interest rate. The sooner you call your creditors, the more likely it is that you’ll reach an agreement that fits within your budget.
What to Do If Your Creditor Contacts You
Life happens. While waiting until your creditors contact you about unpaid debt is less than ideal, you do still have options, no matter how much debt you owe. Even so, you must be willing to make the effort to contact your creditors, explore options, and display a little financial flexibility to reach a solution.
Explore Your Options
Not every debt collector provides five-star service. Some representatives may voluntarily disclose all available options to debtors. Others, due to lack of experience or laziness, may not. Demonstrating a proactive approach to debt management plays a major role here. Ask your creditor what options you have to bring your account into good standing, beyond, of course, paying your balance in full on the spot.
Record Any Unfair Collection Practices
There are strict regulations regarding how debt collectors can interact with and seek payment from debtors. Under the Fair Debt Collection Practices Act, creditors can not:
- Charge fees other than those mentioned in the contract or otherwise permitted by law
- Print words or images on envelopes sent to you that let others know a debt collector has sent them
- Deposit one of your post-dated checks before the date specified
- Make misrepresentations regarding the debt
- Threaten your arrest or other false repercussions
Dispute Your Debt
If a creditor contacts you about a debt you do not owe, you can dispute it. We recommend doing so via a certified, written letter. While you can do so over the phone, written notice provides proof that you disputed the debt and when. Sending the letter via certified mail provides proof the creditor received the dispute.
After you dispute the debt in writing, you may enjoy a brief reprieve from collection activity while the creditor locates documentation to prove that the debt is valid.
Disputing a debt comes with some risk. Hiring an attorney beforehand can help you avoid some of the negative consequences of a debt dispute. Siddons Law Firm has helped hundreds of clients resolve their financial obligations, including many who successfully disputed their debt. If you believe a debt was misattributed to you or that the statute of limitations has run on it, hiring an attorney could be the first step in erasing that debt forever.
Hiring a Debt Settlement Attorney
Remove some of the uncertainty surrounding your debt by hiring a debt settlement attorney. Hiring a licensed attorney gives you a little extra firepower when dealing with creditors. The simple act of hiring an attorney lets your creditors know that you are serious about dealing with your debt. An attorney will also explore all available options and protect your credit status.
Beware of Debt Settlement Companies
Remain vigilant against debt settlement companies posing as law firms. Many of these companies tout their stables of licensed attorneys and even walk a thin legal line by calling their businesses “firms.” While many of them do have attorneys on staff, they often hand debt cases over to non-attorney staff members.
If you do decide to use a debt settlement company, make sure you understand exactly what they will do for you. If you sign up for so-called debt relief, you need to know whether that means:
- Debt consolidation
- Payment plan
- Debt settlement
- Credit counseling
Choose an Attorney You Can Meet Face-to-face
One red flag to watch out for: being asked to pay fees without first having a face-to-face meeting with the person handling the case. With something as important as your financial future hanging in the balance, taking a blind shot represents an unnecessary risk.
You want to ask questions during your initial consultation with an attorney so you can gauge his or her reactions. When embarking on the debt settlement journey, finding the right attorney is of paramount importance. Find out what options you have, how long it will take, how much it will cost, and what impact it will have on your credit.
Benefits of Hiring a Debt Settlement Attorney
Inserting an attorney into your debt settlement battle provides the ultimate peace of mind. When you discuss your debt issues with an attorney, you can feel confident that he or she will explain all possible options for resolving your debt. You’ll also gain access to someone who can defend you in court should your creditors file a lawsuit.
Full Analysis of Your Options
Those suffering from overwhelming debt have a range of debt settlement solutions at their fingertips. Unfortunately, most debtors have little time to explore these options on their own. An attorney can fully explain what can and can’t be done about your debt.
At Siddons Law Firm, we have successfully settled hundreds of debts, defended debtors from creditor lawsuits, and represented clients in bankruptcy proceedings. Through careful analysis of your particular case, we will recommend the best available options so you can put your past debts behind you.
Defense from Creditor Lawsuits
If you’ve missed too many debt payments or have made statements that escalated your creditors’ debt collections tactics, then you might receive service of process for a lawsuit or have liens placed on your property. Fortunately, if you’ve already hired an attorney to help settle your debt, he or she can assist you with your legal defense.
Sometimes, the debt piles too high, and it becomes impossible to pay it in a timely manner, if at all. In such cases, bankruptcy may serve as the best possible option. Bankruptcy can provide offer a fresh financial start, and in most cases, you’ll be able to keep important assets such as your home or vehicle.
Are you ready to take control of your debt? Contact our team at Siddons Law Firm today. Call (610) 255-7500 for consultation regarding debt settlement, loan modification, or bankruptcy.