Here are some things you can do to protect your assets — and still make sure that bankruptcy is an option if it gets to that point.
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5 Ways to Protect Your Assets
You can use different asset protection trusts to help you protect your money from lawsuits, creditors, and even from the IRS. However, if you hide your money in a trust, you need to be aware of some of the downsides. First of all, the kind of trust that is most likely to protect your assets is an irrevocable trust.
- Stay calm. Explain your financial situation and how much of the bill you are able to pay, according to your repayment plan. - Dispute debts in writing. If you believe you don't owe the amount claimed or otherwise disagree, make your reasons known promptly in writing to both the creditor and the collection agency.
Either way, if you or the business can't pay back the debt, a secured creditor can repossess or foreclose on the secured property, or order it to be sold, to satisfy the debt. An unsecured creditor is one to whom no collateral has been pledged and who hasn't filed a lien.
Get professional help: Reach out to a nonprofit credit counseling agency that can set up a debt management plan. You'll pay the agency a set amount every month that goes toward each of your debts. The agency works to negotiate a lower bill or interest rate on your behalf and, in some cases, can get your debt canceled.
Avoiding Frozen Bank Accounts
Funds Exempt from Creditor Seizure
Some types of money are automatically exempt (protected) from your creditors, regardless of where you live, including: Social Security and Supplement Security Income (SSI) federal, civil service, and railroad retirement benefits. veterans' benefits.
Debt collectors report accounts to the credit bureaus, a move that can impact your credit score for several months, if not years. ... The late payments and subsequent charge-off that typically precede a collection account already will have damaged your credit score by the time the collection happens.
Even though debts still exist after seven years, having them fall off your credit report can be beneficial to your credit score. ... Note that only negative information disappears from your credit report after seven years. Open positive accounts will stay on your credit report indefinitely.
Your creditors do not have to accept your offer of payment or freeze interest. If they continue to refuse what you are asking for, carry on making the payments you have offered anyway. Keep trying to persuade your creditors by writing to them again.
Federal law allows only state and federal government agencies to take your refund as payment toward a debt, not individual or private creditors. But again, this changes once you deposit your refund in your bank account, when private creditors may have access to those funds, depending on your state.
How to deal with debt collectors
“Typically, a creditor or collector is going to sue when a debt is very delinquent. Usually it's when you're falling at least 120 days, 180 days, or even as long as 190 days behind,” says Gerri Detweiler, personal finance expert for Credit.com, and author of the book Debt Collection Answers.
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