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How Debt Collections Work

debt-150x108If you have debt, such as credit cards, there is a timeline followed by your creditors in collecting these debts.

Thirty Days

If you miss a payment on one of your debts by more than thirty days, the creditors will immediately start making phone calls and sending you letters about paying the debt.In some situations, the lender will also report to credit reporting agencies that you were more than thirty days behind on the payment of a debt. If you should find that you cannot

make a payment, you should call the creditor and explain your financial circumstances and advise the creditor when a payment will be forthcoming.

Sixty Days

You now are two months behind in paying the debt. This will cause credit cards to go into collection activity. This is an area maintained by the creditor to deal with nonpayment of credit cards. The amount of collection activity will become more forceful. The creditors may warn you about some type of delinquency action to be taken against you. The creditor will contact credit bureaus and provide them with information that you are sixty days behind. It is still not too late to contact your creditor and try to work out some type of payment plan.

Ninety Days

You are now three months behind on paying your debt. The creditor, in most situations, will cancel or suspend your credit privileges. You will definitely be reported to a credit bureau concerning your delinquency. Late fees and interest will be charged to your account. This may be the last time you have an opportunity to reactivate your account by entering into a payment plan. The creditors will become confrontational if a payment plan is not worked out.

Charge Off and Litigation

After more than ninety days, a creditor can charge off your debt as un-collectable. This may trigger the matter being sent out to a third party collection agency or collection lawyer. The collection agency or collection lawyer will send aggressive letters and make very aggressive phone calls trying to motivate you to pay your debt. They will also threaten

you with legal action if the debt isn’t paid. Should the collection activity by the collection agency be unsuccessful, your debt may be turned over to a collection lawyer who will institute a lawsuit against you. Should you receive a summons and complaint with regard to the debt, it is important you either go to court and submit a written answer to the summons and complaint or retain counsel to represent you.

debt1-150x150Bankruptcy

If you have multiple creditors chasing you regarding the payment of credit cards or other debts, bankruptcy may be an option for you. There are two types of bankruptcies available to individuals, which are Chapter 7 and Chapter 13 bankruptcies. The filing of a bankruptcy will stop debt collection activity, stop foreclosures from moving forward and assist you in re-establishing your credit in the long run. Chapter 13 bankruptcies, in certain situations, can also eliminate second mortgages.

There are many myths that people believe regarding bankruptcy that are simply untrue. Should you have questions regarding debt collection activity or bankruptcy issues, feel free to call the Law Offices of Schlissel DeCorpo. Our office has filed hundreds of bankruptcies and assisted our clients in numerous lawsuits against them regarding alleged debts. Feel free to call us for a free consultation

Bankruptcy, Foreclosure and Divorce

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If one of the parties to a divorce action files for divorce, can he or she later file bankruptcy during the course of the divorce? The answer to this question is yes. Now let’s change the circumstances a bit. A husband and wife are involved in a divorce and during the course of the divorce, the husband is ordered by the court to make mortgage payments. Unfortunately, he falls behind in the mortgage payments. Is filing for bankruptcy the best route to stop the house from being foreclosed upon? The answer to this question in many instances is yes.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the debtor sets up a plan to reorganize his or her debts. The plan is designed to bring the debtor up to date on his or her debts during a period of three to five years. The amount of the payment pursuant to the bankruptcy plan is based on the debtor’s income.

Debts are classified into various types within the plan. Unsecured creditors, such as debts related to credit cards, may be paid on a percentage of what is owed. Interest and penalty payments to these creditors are eliminated in the plan.

Mortgage Payments

Secured creditors, such as mortgage holders on real estate, are paid 100% of what they are owed under the plan. Banks holding mortgages who have refused to accept payments from the debtors are now forced to accept mortgage payments from the debtors under the bankruptcy plan.

Bankruptcy Protection for the Spouse

Under the bankruptcy law, child support and spousal maintenance payments are non dischargeable debt. This means a father obligated in the divorce to pay spousal maintenance and child support to his wife cannot eliminate these debts. Financial obligations of the payer’s spouse, under court orders of the divorce to make mortgage or home equity line payments, are considered to be part of the spousal maintenance and child support payments and these obligations are also non dischargeable in bankruptcy.

Chapter 13 bankruptcies can successfully be utilized to give a spouse who has obligations to make mortgage payments and pay spousal maintenance and/or child support an opportunity to come current in these obligations, save the home from being sold in foreclosure and comply with the state court order.

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Foreclosure Defense

The foreclosure defense lawyers at the Law Offices of Schlissel DeCorpo have been representing individuals with financial difficulties for more than three decades. Our office helps our clients prepare mortgage modification applications. We also deal with mortgage modification programs that fail to meet our clients’ needs. We defend foreclosure lawsuits for our clients. We attend foreclosure court conferences, litigate defective foreclosure lawsuits, predatory lending issues, defective mortgages and bad faith on behalf of financial institutions. We also assist our clients with other types of real estate litigation. Should bankruptcy be the route to dealing with our clients’ problems, we file both Chapter 7 and Chapter 13 bankruptcies on behalf of our clients. Feel free to call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.

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