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2. Make a Lump sum offer. Realize that often if you are seriously delinquent or better yet if the debt has been sold to a collection agency you can often settle debts for 30 cents on the dollar or even less! Know your creditor- some creditors like Discover Card generally demand 70 cents on the dollar. Collection agencies who bought your debt in a bulk purchase with little to no documentation are often willing to settle dirt cheap.
3. Demand the account be closed. Sometimes if you ask the creditor to simply close the account, freeze interest and penalties, and put you on a payment plan of say $100 per month with no penalties and interest they realize you are truly desperate to get out of debt. If you are paying 29% interest you must immediately get out of that that arrangement or else you might never escape perma-debt. 4. Get any deal in writing. Don’t pay a dime until you get a deal in writing. Debts are often sold to third parties. Without any evidence of your deal the new purchaser may not honor your prior deal.
This is very different from credit card debt, where a creditor usually must file suit for money owed, rather than repossess collateral. Although bankruptcy can discharge both secured and unsecured debts the lien is generally not eliminated by filing bankruptcy. Translation: if you want to keep your house or car- you have to keep paying.
Although we stated earlier that credit card debt is unsecured debt, there is a rare instance when it may be considered secured debt. When a store such as “Best Buy” or “Rooms to Go” issues a credit card or extends credit for you to buy merchandise in store they may take what is called a “Purchase Money Security Interest” in your I-Pad, Refrigerator, or Bedroom Set. Although used items are rarely worth pursuing, the creditors do retain the option. Our next post will deal with discharging tax debt in bankruptcy, which is usually unsecured debt, but may be become secured debt in the event of a filed tax lien.
3. Create savings. If the mortgage company asks for an update of your bank account 6 months from now and you have less than $1,000, but also have not a made a mortgage payment in months, then why would they assume you will suddenly be able to start making mortgage payments if approved?
In North Carolina, a delinquent home owner can expect to receive a payoff statement before the actual foreclosure begins. When you receive this, you can be sure the foreclosure process has begun. A payoff statement is a legal requirement that simply provides you with the total amount owing on the mortgage. Thereafter, the lender will instruct a substitute trustee (essentially, a neutral middle man) to start the foreclosure proceedings. Typically (and unfortunately), that means that the Sheriff will deliver a Notice of Hearing to your door (you may also receive notice via certified mail or notice may simply be posted on your front door).
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