In today’s world, establishing credit is a must. This is done by financing items or getting into some debt and making payments. Unfortunately, debt can add up quickly. Payments can grow quite large, and making monthly minimum barely makes a dent in your total balance due to high-interest rates.
Unsecured Debt
Unsecured debt is money that is owed that is not tied to property. For example, it could be anything from credit cards, personal loans, medical bills. Back rent or utilities have also counted towards unsecured debt. If you fall behind on those payments, creditors will have to go after you personally in the form of collections or a lawsuit to get their money.
Falling behind on payments means several fees will be added to your bill. Missing several payments leads to receiving a phone call from your creditor trying to collect a payment and get you back on track. Unfortunately, the next step is often having your account sent to collections. This affects your credit score and will be posted on your credit report. With collection agencies, things can escalate very quickly, and you may find yourself receiving paperwork for a lawsuit against you for the money you owe.
You can challenge the lawsuit in court, but if you aren’t up to date on your payments, the court will rule in favor of your creditor, and they can garnish your wages. I won’t let things get to that point, but you need to call me if this is your situation.
Secured Debt
Secured debts are tied to items such as a car or home. If you fall behind on payments, it’s possible for your creditor to take those items back in an effort to pay off your debt. The process from your first missed
With secured debt, creditors are often willing to work with you. Working with your creditors will help you to avoid damage to your credit. Most companies would prefer not to go through the expense of a repossession or foreclosure, and so are willing to reduce payments or lower your balance or interest rate to help you get back on track.
Unlike unsecured debt, with secured debt, the creditor doesn’t need to file a lawsuit to repossess your car, for example. They can simply show up and take it. If you’re behind on your mortgage payments, the bank needs to ask the court for approval before moving forward with a foreclosure. This could take many months, so some creditors will file a lawsuit instead of taking your property.
Hire an Attorney
Debt is stressful enough. When you add repossession, foreclosure, or lawsuits on top of it all, it can be too much to handle on your own. Call your local Portland attorney and let them guide you as you work your way to financial freedom.