Non-Bankruptcy Debt Negotiation

As a general rule, if you spend more than a third of your monthly income on debt retirement, that debt is impossible to pay off. Note we said “debt retirement” and “debt servicing.” Paying monthly minimums on credit cards and other revolving debt accounts doesn’t affect the UPB (unpaid principal balance). These families will be stuck on that treadmill forever. Furthermore, payday loans and one-time financial windfalls, like tax returns, don’t count as “monthly income.”

Poker players sometimes bluff to win pots. Similarly, Chicago debt relief lawyers sometimes bluff to obtain more favorable debt repayment terms. Just like a bluff might be better than a winning hand, the threat of filing bankruptcy, even if it’s an empty threat, might be a better way to avoid repaying crippling debt. There is no one-size-fits-all solution to debt problems. Our flexible Chicago bankruptcy lawyers are flexible enough to offer several solutions.

Repayment Terms

Borrowing money is a little like buying a new car. Sales negotiations usually involve some give and take. But the customer usually does all the giving, and the dealer, or in this case the banker, does most of the taking.

Things are different when a Chicago bankruptcy attorney gets involved. Attorneys are good negotiators. They come to the table with a plan. Furthermore, they know when to stand firm and when to compromise. Additionally, many banks are as scared of bankruptcy as many consumers. Banks fear that if they don’t make favorable deals, the customer will file bankruptcy.

If that happens, and the debt is unsecured, the bank usually gets nothing. If the debt is secured, the bank usually receives practically nothing. It gets a well-used vehicle, house, or other asset that’s probably only worth pennies on the dollar.

So, an attorney has some leverage. A little bit of leverage is all it takes to move a huge boulder, or in this case, a stingy banker.

Other negotiable terms include payment date and the number of payments. Moving a payment date by a few days could make a big difference to a family’s cash flow situation. If the debtor is behind a payment or two, the creditor often agrees to move these delinquent payments to the end of the loan period, or even forgive these late payments entirely.

UPB Reduction

Pretty much everything is negotiable, even the UPB. However, banks usually don’t budge in this area unless there’s evidence of fraud or negligence.

A mere hint of misconduct is usually enough. Bankers spend millions of dollars building up their images as friendly and caring professionals. A single bad news expose, even if it’s only partially true, undoes all those efforts.

As mentioned, pretty much everything is negotiable, and banks have lawyers too. It’s usually unrealistic to expect a bank to wipe away a large debt, like a large student loan or home mortgage. But it is realistic to expect the bank to reduce the UPB and make monthly payments more affordable. That’s especially true if the bank faces a choice between making a deal and watching a journalist run one of those “the bank ripped me off” pieces.

 Connect with a Thorough Cook County Lawyer

No matter what kind of financial problem you are having, a solution is usually available. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Source:

investopedia.com/ask/answers/12/reasonable-amount-of-debt.asp