- Will you bank take a financial haircut on your loan?
There’s a myth floating around that debt collectors will settle a debt for 50% or even 30% of the amount owed because they’d rather get “something instead of nothing.” Unfortunately, that’s not always the case. As an Asheville debt settlement lawyer I feel it is my duty to debunk this prevalent myth.
Diligent debt collectors, of which there are many, will settle a debt only to the extent that they believe it is in their best interests. Debt collectors have an arsenal of weapons to use against a debtor. At the worst they can obtain a judgment and, if the debtor owns a home in the county in which the judgment was obtained, force a sale of the debtor’s home to satisfy the debt. Although there is no wage garnishment in NC a debt collector with a judgment can garnish proceeds on deposit in a debtor’s bank account. A debt collector with a judgment can even take and sell your car!
Given that a debt collector has these weapons in its arsenal, it may not agree to settle a debt for a low amount. For example, if you have a really nice vehicle and/or a lot of equity in your home, a debt collector may determine that it is better served selling your house and/or vehicle to satisfy the debt than to accept a low payment.
You may reasonably ask how a creditor knows what assets you have. There are many ways. the most common method is simply to ask. These days, before I even attempt to settle a debt with a debt collector I ask my client to provide a detailed list of his or her assets. This is because most creditors won’t settle without first looking at a the debtor’s asset list (or a “personal financial statement.”) So, I can advise my client on how much of a financial “haircut” a creditor may be willing to take before I even call. If I have a client with almost no assets I can be more confident about settling for a small percentage than if my client has lots of valuable assets.
We resolve debt issues at Kight Law Office. We enjoy and take pride in helping people get out from underneath overwhelming debt stress. Contact us today to see if Asheville debt attorney Rod Kight can help you.