Debt Snowball: When to Get Legal Assistance

If you are struggling to pay your bills, you may soon find yourself facing a debt snowball as late fees, over the limit fees, and other penalties accrue. Harassing and threatening calls from bill collectors may make you feel that your situation is hopeless. The good news, though, is that your creditors are not necessarily in the driver's seat. By obtaining good legal advice, you may be able to reduce or even eliminate some or all of your debts.

When to Contact an Attorney

If you are being threatened with legal action you should contact an attorney. Depending on your situation and your goals, your attorney may recommend that you file bankruptcy, obtain a debt consolidation loan, or negotiate a debt settlement agreement with the creditor.

If one or more of your creditors has filed a lawsuit against you, don't ignore it. If you ignore it and don't show up for the hearing, a default judgment will be entered against you and the creditor will begin making collection efforts against you, including garnishing your wages and levying on your bank accounts and other property.

Once you have been served with a lawsuit, you need to hire an attorney to represent you in defending the lawsuit. Your attorney will assert legal and factual defenses to the lawsuit including that the debt has been paid in full or that you are not legally responsible for the debt. Your attorney may also determine that your best option is to file bankruptcy. If you file bankruptcy, the automatic stay will prevent the creditor from moving forward with the lawsuit.

You should also consult with an attorney if you are facing foreclosure. Oftentimes, homeowners have legal defenses which may be asserted to stop the foreclosure. The most common defenses include:

• Defective foreclosure documents;
• Violation of Truth-in-Lending laws;
• Violation of the Real Estate Settlement Procedures Act (RESPA)
• Violation of the Home Owner Equity Protection Act (HOEPA); and
• Violation of state foreclosure laws.

Your attorney may also use these defenses as leverage to negotiate a loan modification, short sale, or deed in lieu of foreclosure on your behalf.

Hiring an attorney is also a good idea if you have been the victim of unfair debt collection practices. The Fair Debt Collection Practices Act prohibits debt collectors from using threats and harassment as a means of extracting payment from debtors.

Getting Legal Help

If you are drowning in debt and looking for viable solutions, you should speak with a debt settlement attorney. A debt settlement attorney will advise you of your options and assist you in implementing the option that is best for you.