Do you need a debt negotiation and settlement attorney to help you get out of debt using your real estate as collateral? Absolutely! Many people are tempted to try debt negotiation and settlement without an attorney. However, when you are considering putting up your real estate as collateral for the debt negotiation and settlement, you want an experienced Ocala debt settlement attorney to help you. Using real estate as part of the debt settlement plan can be risky. Therefore, it benefits you to have an attorney who has experience in real estate, bankruptcy, and debt settlement.
What is Debt Settlement?
Debt settlement is an alternative to bankruptcy and other types of debt relief. You negotiate with your creditors to reduce the amount owed on each account. In most cases, you agree to pay a specific percentage of the amount owed on an account to settle the debt in full.
However, you must have a source of funds to make a lump sum payment to each creditor. For some people, using the equity in their real estate allows them to get rid of debt for a percentage of what was owed and consolidate the remaining debt into one monthly payment.
When Should You Hire an Attorney?
You should consult with a Ocala debt settlement attorney before you negotiate with the first creditor. Our attorneys review the type of debt you owe, the amounts owed on each account, the equity in your home, your income, monthly expenses, and other assets. We want to ensure that debt settlement is the best way for you to eliminate debt while continuing to protect your home and other assets.
In addition, because our attorneys are experienced real estate attorneys, we can also handle the closing on your equity line or second mortgage for you as we negotiate with your creditors to settle your debts.
How Does Debt Settlement Work?
Once you have obtained the proceeds from your home equity loan or second mortgage, we know exactly how much money we have to work with to settle your debts. In most cases, we begin by offering each creditor the lowest percentage we believe the creditor may accept to satisfy the debts. Before we make the first offer, we must calculate the amount to be paid to each creditor to ensure we have sufficient funds from the real estate loan to pay each creditor while keeping a surplus of funds for negotiation.
Creditors rarely accept the first offer in a debt settlement negotiation. In some cases, the creditor makes a counteroffer. From this point, our attorneys continue to negotiate back and forth with each creditor until we agree to an amount with your creditors. If the amounts are acceptable, we issue checks to the creditors in exchange for a written release of all amounts owed to the creditor.
Are There Risks with Debt Settlement?
Yes, there can be risks with debt settlement. For instance, creditors are not required to negotiate a debt and some creditors will not settle for less than 75% of the amount owed on the account. It takes only one or two creditors who refuse to negotiate to cause a problem. Therefore, you could settle most of your debts but have one or more creditors that you must continue paying under the original terms of your loan or credit agreement.
In addition, you are using the equity in your home to pay the debts. If you cannot make the mortgage payment for any reason, you could face a foreclosure action by the mortgage company. Therefore, you need to be sure you can afford the payments on a second mortgage so that you do not risk losing your home for a debt settlement.
The Benefit of a Real Estate Attorney and a Bankruptcy Attorney
When you are contemplating debt settlement using your home's equity, consulting an attorney who is experienced in real estate and bankruptcy law is very beneficial. Our Ocala debt settlement attorney analyzes your entire financial situation to determine the available options for getting out of debt. Therefore, you can review several different options, including debt settlement, debt consolidation, and bankruptcy, to determine which option is best for you.
In some cases, a debt settlement may be the best option, especially if you have sufficient equity in your home, a reliable income, and just a few accounts. However, if your debts are significant or you have many creditors that you must negotiate with for debt settlement payments, a bankruptcy filing may protect the equity in your home and get rid of your debts.
Consult a Ocala Debt Settlement Attorney
Debt settlement can be a lengthy, frustrating process. It helps to have an experienced attorney at your side to advise you of your options and protect your best interests.