Article 1 section 8 of the United States Constitution gave the US Congress the authority to establish laws on Bankruptcy. The founding fathers knew that bankruptcy was necessary to give people and businesses a chance to clear away overwhelming and burdensome debts and start anew. Even though bankruptcy laws have been around since the founding of the USA, many people still see a stigma to declaring bankruptcy.
Debt does not disappear if it is not paid back. It will just continue to grow. Most loans have provisions for fees and penalties if the terms of the loan repayment are not met. Once a loan payment is late for more than 30 days it is a reportable event to the credit reporting agencies. This will be a blemish on a person's credit reports that will give future lenders a reason to charge higher interest or decline a new loan or line of credit.
Lenders are allowed to contact debtors that have missed even one payment. Many large lending institutions such as banks and credit card companies maintain call centers dedicated to collection of late payments. The collectors can contact debtors at work or at home. If the collector cannot reach the debtor they can contact friends or relatives listed on the loan or credit card application.
Collectors are allowed to call debtors between 8 am and 9 pm seven days a week. There are laws that govern collections agents and their behavior. Even though they are not allowed to use obscene, abusive or threatening language, it can still be very annoying to have collectors call when money is scarce.
The two major reasons people file for bankruptcy are divorce and catastrophic medical expenses. Even people with health insurance can incur large medical bills. Most people get their health insurance through their employers. Most employers have had to raise employee payments, coinsurance, deductibles and cut back on benefits due to increasing health insurance costs.
When people find themselves facing overwhelming debts with no prospects for repayment on the horizon, they should seek the assistance of a bankruptcy attorney. Bankruptcy lawyers are knowledgeable about all methods of legal debt relief. They can provide quick and competent answers for all your bankruptcy questions.
They can also suggest other means of debt reduction that may suit your needs better. If a settlement or a debt consolidation loan may work better, the attorney can negotiate with your creditors for principal and interest reduction. When a bankruptcy attorney works for a debtor, they instruct the lenders to contact them and leave the debtor alone. Just the relief from the collections calls helps many debtors get back on their feet.
Hiring a bankruptcy attorney is the best course of action for people with a large unmanageable debt load. Whether the bankruptcy lawyer recommends filing for bankruptcy or some other form of debt reduction and management, it will start the process of rebuilding your credit and the elimination of debt.
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