Credit cards, mortgages, student loans, car loans and personal loans all contribute to Americans’ addiction to debt. About one-quarter of Americans reportedly carry no debt, but for the rest of us, the average is $26,621 per person, according to a 2020 survey.
When debt is already a part of your life and you lose your job, contract a long-term illness or simply can’t break your overspending habits, your financial outlook can appear quite grim. If you’re no longer able to pay all your bills, you may start receiving harassing calls from creditors whose payments you are neglecting.
If you or a loved one are in this situation, don’t despair. There may yet be hope for finding your way out of the debt maze. But don’t expect quick fixes. The Federal Trade Commission warns consumers to be wary of ads that promise debt relief but end in bankruptcy. While bankruptcy is a workable solution for some people, its long-term impact on your credit rating and your reputation can have an adverse impact on your ability to get credit, a new job or a new home.
What should you do? You may want to seriously consider hiring an experienced debt restructuring attorney whose experience can guide you through the convoluted debt maze.
What is debt restructuring?
Debt restructuring occurs when a creditor changes the terms of your loan agreement. Perhaps a creditor would let you skip a few payments or avoid certain late fees? However, if you’re already months behind on your payments, this might not be a workable solution.
What are the typical kinds of debt restructuring?
While each case is different, you might learn that your creditors are willing to work with you on a debt restructuring plan. The most common examples of restructuring would:
- Reduce your current interest rate on debt;
- Lower your overall remaining debt;
- Create smaller monthly payments by extending the length of your repayment plan; or
- Wipe out the debt you owe by adding it to your principal balance.
Why hire a debt restructuring attorney?
These attorneys frequently have close relationships with lenders. Rather than facing a potentially hostile creditor, you can have an ally negotiate on your behalf for lower interest rates, loan forgiveness or for other more favorable terms that benefit you. Your attorney can help you fight to keep your property and personal belongings, get out of debt and start fresh again.