What Do I Do If…?

I am being sued

Read the information on the summons. Do not put your head in the sand. Make an appointment with an attorney and obtain legal advice. What approach to take will depend on more than the lawsuit? Is bankruptcy an option? Are you exempt from collection or is this something that needs to be settled? Is it a good case for them?

I can’t make my mortgage payment

Start with your budget. Is your house worth keeping? Contact your mortgage company and start working with them. Focus on the big picture. Does it make sense to keep the house? What would it take for it to make sense? Is the loan to value ratio larger than 1?  Can you rent the same for less? What about the family? The questions go on and on. Your plan needs to make sense. Strategic defaults, when you can clearly afford to pay the mortgage are probably bad faith attempts to settle. If you are asking the mortgage company to work with you, be prepared for the documents that will be requested. Getting your hardship letter and a clear and realistic financial package to the bank is the first step toward the long road to a modification.  Try to think objectively while giving weight to what matters to you the most.

I can’t make my car payment

Can you afford the car? Check your budget. Do you know where all the money is going? Car payments become a balancing act.   $400 a month over a year is $4,800. If you cannot afford to buy a car outright, you certainly cannot afford to buy the car plus pay interest. Before getting into a car loan think about the step method. Start with a $1,000 car and make payments to yourself (save the money you would have been paying on a more expensive car). When you have saved $1,500, sell the $1,000 car and buy a $2,500 car and start saving again for even a better car. But what should I do now that I have to make a payment which I cannot make? Start with a budget makeover. If you still can’t make the payment, consider the benefits available in a Chapter 13 and whether that fits into your big picture or the idea of relinquishing the car. Try calling your lender and work with them to catch up. See an attorney to discuss your options and potentially make a long term plan.

Collectors are hounding me

Take steps to protect yourself and get some peace of mind. Retain an attorney and document your notices that you have an attorney on your debts. If you cannot afford to pay, let the collectors know and document when and whom you talked to and if they call back, be sure to document that, too. Collectors who try to collect, knowing you cannot pay, are harassing you. If you can clearly document that they know and they still tried to collect, you might be able to take action against them. See an attorney who offers protection against harassment and see if they can help you. The initial consultation is usually free.

I am being garnished

In most cases bankruptcy can stop the garnishment quickly, with all garnishments collected after the bankruptcy is filed returned to you. Remember, not all garnishments are protected by bankruptcy. See an attorney. The other way to stop a garnishment is to file a claim of exemption in State Court. Sometimes the collector’s attorney will cooperate, but it will still take a judge, because it is the judge’s order that got the bank or other institution to take the money.

I am overwhelmed

Take a deep breath. Budget makeovers are always a good place to begin. Go get a free initial consultation. If you are overwhelmed, it could be because there are just too many uncertainties in your financial life. Start boxing and organizing all the bills, pay stubs, bank statements, letters and tax returns. Then itemize your income, expenses and assets. This is the first step to your budget makeover.