home loan finance blog
Everyone faces financial emergencies from time to time. What you do about them is often the difference between disaster and weathering the storm. A financial emergency is any situation that has the potential to leave you homeless or without an essential property or service. A potential eviction, the threat of foreclosure, a threatened cut-off of utility services such as electricity, water, gas or phone, an IRS seizure of your house or the threatened repossession of your primary mode of transportation represent very real financial emergencies. A bothersome call from a bill collector, while not very inviting does not constitute an emergency.
If you face a real emergency you must act at once. Your first step is to contact the creditor that is threatening the loss of property or essential service. Often you will be able to negotiate a temporary solution that will allow you to remain status quo as you are working on fixing the economic condition that caused the emergency in the first instance. Remember, that whatever you are able to negotiate is temporary and will only remain in effect if you meet the conditions that you have negotiated for. If this fails your next option is to contact a lawyer to help you negotiate with your creditors. One option is to file for relief under the bankruptcy code if your financial condition justifies such a move. Only a lawyer specializing in bankruptcy law can advise you if this is an appropriate move.
The point is that, as tempting as it may be to ignore your creditors in times of stress, it is often the worst choice available to you. Creditors are not interested in pursuing their ultimate rights of collection. This is a costly process and one that almost always insures that the creditor will not recover full value of what is owed. By working with your creditors and negotiating a temporary settlement you go a long way toward cementing good relations with them.