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8 Things to Know When Going Into Debt

Author: Adv. Tomer Rabinovich
Have you sunk into debt? Eight points to consider when planning your way out of debt

The causes of sinking into many and varied debts are. A sudden large expense, layoffs and taking out too large a mortgage or many loans that cannot be repaid.

Some feel that their debts are out of control, that they barely make ends meet, and that they don’t know what will happen next month.

In such a situation, it is often difficult to know how to start and treat the situation. Here are some things to consider when starting debt processing.

When you get into debt, your creditors are also in trouble

Remember that everyone has an interest in finding a quick solution to the problem, even at the cost of a painful compromise. A good settlement offer can save everyone a lot of hassle and aggravation.

Don’t give in to pressure

Once you realize you’ve gotten into trouble, stop everything and don’t pay anyone, except as part of a comprehensive settlement approved by the court. If you can’t pay all the debts, it’s a shame to “waste” resources putting out fires, and it’s better to keep every penny available for the settlement.

Don’t fall behind on mortgage payments, current bills, taxes and alimony

The exceptions to the previous rule – it is highly advisable not to accumulate arrears in these payments, because this may entangle you in damages that will be very difficult to repair.

Under no circumstances should you agree to leave the house

This is your strongest card. Take good care of it. And this is also another reason not to fall behind on mortgage payments – as long as the mortgage is paid, it will be very difficult for creditors to evict you from your home.

Under no circumstances should you turn tothe grey market

This will only make you sink even deeper into the mud!

Be honest and transparent with your creditors

Do not try to smuggle assets and do not make promises to creditors that you will not be able to keep. Remember that good faith is a basic condition for any creditor settlement, and that you need creditors’ support for the settlement to be approved.

Share the problem with your relatives

There is nothing to be ashamed of, it can happen to anyone. You’ll probably need their help at some point. If someone close to you is also a guarantor of one of the debts, it is probably better to hear about the problem from you, rather than from the bank.

Seek advice as soon as possible

As in medicine, early diagnosis allows for a better solution. A diagnosis too late can result in you being left without a home, without savings, and without a creditors’ arrangement. It is highly recommended to contact a professional who has proven experience in executing creditor arrangements and bankruptcies.

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