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This Halloween, as we face our fears and approach the end of the year, we thought it would be a good time to talk about DEBT. At its most basic, “debt” is a consumer’s obligation to pay money arising out of a transaction. Pretty much everyone deals with debt in their lives. If you use credit cards, have a mortgage on your house, have a car loan, or pay student loans, you have debt.
Although debt is common, it can become a problem when you are no longer able to meet your various financial obligations. Maybe you unexpectedly lost your job or had to receive unplanned medical care. Maybe you had an expensive appliance break or experienced a natural disaster. Or maybe it’s just been a challenging year. For whatever reason, many people will face a financial crisis at some point.
Being proactive about your debt problems can be a good strategy to prevent a bad situation from getting worse. Here are six ideas to consider if you are feeling overwhelmed by your debt.
Knowing the terms of your agreement may be particularly useful if you have secured debt. Debt may be unsecured, i.e. not attached to a particular asset, or secured. Secured debt is debt that is backed by “collateral,” or in other words, an asset, like your car or your house. The collateral is designed to reduce the risk of lending to you. If you default on your obligation to pay, the asset securing the transaction may be repossessed or foreclosed upon. You will want to read your contract carefully to see what the creditor’s rights are when you do not make a full payment and whether there is any grace period built into your agreement.
There are potential risks to using one of these services and you always want to be mindful of possible scams. The FTC has a more in-depth guide on “Coping with Debt” that walks through the pros and cons of using debt relief services or pursuing debt settlement.
However, you should know that the federal Fair Debt Collection Practices Act (FDCPA) affords you certain protections in dealing with a debt collector. There are limits on when and how a debt collector can contact you. For example, a debt collector cannot generally call you before 8:00 AM or after 9:00 PM, and they must honor your written request to stop further contact. Debt collectors are not allowed to harass you, lie, or use unfair practices in trying to collect your debt. You can check out the full FDCPA here or read more about Debt Collection FAQs from the FTC.
The Consumer Financial Protection Bureau (CFPB) also has sample letters on how to respond to debt collectors, including how to request more information, state you do not owe the debt, and ask the debt collector to stop contacting you.
Here at the Lawyer Referral and Information Service, we are happy to provide you with a referral to a private attorney with experience in bankruptcy, debt collection, or consumer protection. The attorney will provide an initial free consultation and then let you know how much their services might cost. Just give us a call at (865) 522-7501 or contact us online at www.knoxbar.org/referral to get your free referral today.
More General Information
If you’re looking for a lawyer and just don’t know where to start, the Knoxville Bar Association’s LRIS is a great place to begin. We match you with a lawyer that suits your needs. Our trusted attorneys provide you with a free consultation so that you can decide if it’s the right fit. Want to learn more? Call us at (865) 522-7501 or visit knoxbar.org/lawyerfinder.
The materials contained in this blog are intended to, and do, provide only a broad overview of various legal topics. The general information contained in this material is not designed nor intended to be a substitute for legal advice on a specific legal issue or question. In addition, the information provided in this material is only general advice and may not be applicable to apparent similar individual problems, since only slight changes in facts change the applicable advice. If you have a legal problem or question, please consult an attorney.
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