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What is a reaffirmation agreement?

Before we can dive in to the topic of reaffirmation agreements and, thus, answer the question posed in the title, let's discuss some basics about bankruptcy. As you know, when you finalize your bankruptcy, your unsecured debts will be eliminated in the discharge process. This is great because it means that you no longer have an obligation to pay your creditors. However, some of those debts may be attached to important pieces of property assets that you have, like your car.

When you have a car loan, it means your bank has a lien on the car and expects you to pay them back. When the loan is discharged through bankruptcy, it would mean that you would lose the car because now that the loan is gone, the bank will "take back" the car that they own.

The automatic stay, your debt, and your rights

Put yourself in the shoes of someone who has significant debt and is being called, emailed, and contacted by creditors on a daily basis. The interactions with these creditors and their associated debt collectors can be hostile, and the individual can end up living in fear of his or her cell phone or email account. Collection efforts are often ruthless and unyielding.

Given this atmosphere, it is no wonder that many people who live with debt are anxious, stressed out, and afraid of dealing with the issue at hand. And it is also why the automatic stay, a crucial part of the bankruptcy process, is so important.

If considering bankruptcy, do not make this one big mistake

At any given moment, many people are considering bankruptcy. They do so for a variety of reasons, such as job loss, medical debt and crippling credit card bills. However, some feel tempted to dip into one last account, their retirement account, before they meet with an attorney.

This frequently turns out to be a big mistake.

Have medical debt? A bankruptcy could help

Debt can pile up in an instant, and all it takes is a major life event for your debt to run out of control. Purchasing a new car or home may be too much too quick, and as a result, your bank account runs dry. You may have a lot of student debt that drains your finances for a long time. Or maybe you make an impulse purchase with a credit card but you aren't able to handle the balance. All of these situations could lead to someone needing a bankruptcy filing to help with their finances.

Another form of debt that isn't always considered by people when the topic of bankruptcy comes up is medical debt. Medical emergencies can cost the patient hundreds of thousands of dollars. Even if it doesn't reach such an astonishing financial level like that, medical treatment can far exceed the amount of money that a patient has the ability to pay for.

Taking a look at non-dischargeable debts

The discharge process is one of the most important aspects of a Chapter 7 bankruptcy. It allows those that have debt to use the bankruptcy process to eliminate -- or discharge -- some of those debts from their record. Liquidation goes a long way towards eliminating these debts. But the process is a helpful one for many individuals and families all across the country.

Of course, the caveat to all of this is that not every debt can be discharged. Non-dischargeable debts exist, and there are plenty of things that are exempt from the discharge process. For example, student debt is the most commonly referenced non-dischargeable debt. Yes, there are extreme circumstances that can lead to student debt being discharaged -- but practically speaking, this debt can't be discharged. Nor can child support debt, personal injury judgments, alimony payments, and certain government penalties and fines.

What is wage garnishment and how can you prevent it?

The phrase "wage garnishment" gets thrown around quite often when the topic of debt or bankruptcy comes up. This is because some creditors will pursue debts that you owe, and when you fail to pay, they take legal action. Wage garnishment is the legal process by which a creditor forces your employer to withhold a portion of your paycheck to ensure they get paid. Wage garnishment can cripple the financial lives of people who are already in a difficult financial position.

Remember that many people suffer from wage garnishment, or from the threat of such legal action. You are not alone if you are in either of these situations. You can also take proactive steps to prevent wage garnishment from happening, or from stopping it.

When do debt collection calls become harassment?

Getting constant calls from debt collectors in Louisiana can really take its toll. You may even receive them at work or they may call your relatives, trying to get information about you. It can be a very frustrating situation. Even if you know you owe the debt, you still do not have to put up with harassment. Luckily, the federal government recognizes that debt collection tactics can border on harassment. There are specific guidelines in place to ensure this does not happen.

The Fair Debt Collection Practices Act is the ruling law about debt collection, according to the Consumer Financial Protection Bureau. The FDCPA enables you to have some control over the way debt collectors contact you and treat you. It gives you legal remedies in some cases for handling harassing tactics.

What to avoid when debt collectors call

Due to a variety of forces, many people end up in outstanding debt. In the state of Louisiana, the average student loan debt was $26,865 in 2015. Those numbers come courtesy of a report published in USA Today

One of the most frightening aspects of too much debt is debt collection. Many collectors utilize sneaky tactics to try to get people to pay. One of those tactics is incessant phone calls. They can become so severe that people stop answering the phone altogether. Anyone in this situation should make sure to avoid the following mistakes when dealing with constant phone calls. 

The dangers of payday loans

If you have ever found yourself in a position where you need more cash on hand, you might have felt tempted to utilize a payday loan. Payday loans are small cash loans you can secure ahead of your paycheck, as long as you agree to repay the loan once you receive your next paycheck.

As you might expect, these loans are not free, and the interest rates and fees sometimes associated with them can prove astronomically high. So, before you sign on the dotted line and secure a payday loan, consider the downsides associated with doing so.

Take control of your financial life

In our last post, we talked about avoiding debt in the first place. This is a means of never having to deal with a bankruptcy filing, which is obviously the preferred way to go through life. However, not every person gets to live that life. Some honest, hard-working people fall on hard times, and when these things happen they will be in need of relief measures that allow them to get out from underneath their debts.

There are ways to manage your debt, and with a bankruptcy filing, you can take many of the steps that alleviate the stress of debt that many people describe. For example, when you owe creditors a lot of money, they will go out of their way to harass you and try to collect that debt. A bankruptcy filing stops the efforts of these creditors immediately.

McBride Law Firm

McBride Law Firm
301 Jackson Street Suite 101
Alexandria, LA 71301

Phone: 318-625-0471
Fax: 318-445-8066
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