It can be a challenge to
live on a fixed income. When this is combined with the costs of
medical care or prescriptions, it can be hard to make ends meet.
What should I do if I am having trouble paying
my bills?
You should contact your creditors and ask them for more time to
pay or for a change to your interest rate. You should do this as
soon as you know you are having trouble paying your bills. Creditors
are more likely to work with you if you have been up-front with
them and let them know you are having difficulties. If you agree
to a payment schedule, be realistic. Do not promise more than you
can pay, or promise to make payments that are too large.
Set a budget. If you need help doing this, you might ask for help
from your local senior center. Certain banks have financial education
information on-line or in booklet format in their branches –see
if this information can help. If you need more serious help, consider
a credit counselor.
Beware of consumer credit counselors who charge large fees or
make promises which sound too good to be true. Check them out with
the Better Business Bureau or with the United States Trustee’s
office.
The United States Trustee Program approves credit counselors for
people filing bankruptcy. The UST web-site lists approved credit
counseling agencies and also has Frequently Asked Questions regarding
this type of assistance. www.usdoj.gov/ust.
Be aware that if you file for bankruptcy, you will be required
to complete credit counseling before you can file.
Be very cautious about debt consolidation loans. If the interest
rate is too high, you could just be digging yourself into a deeper
hole. In addition, home equity lines can put your home at risk,
which simple credit card debt may not do.
What happens if I just don’t pay my bills?
Some bills are more important than other bills. Home mortgages
and car loans are generally secured. This means that you have agreed
to let the creditor take, or repossess, your home or your car if
you don’t make the payments. Since you voluntarily permitted the
creditor to take a security interest, you cannot rely on homestead
exemptions or similar protections to prevent the creditor from
taking back its security.
Other bills, like most credit card debt, are unsecured. If you
fail to pay this type of debt, the creditor can sue you for the
amount owed and obtain a judgment. The creditor can use that judgment
to garnish wages, attach assets and attempt to collect the amount
owed to it. Unsecured debts are subject to state exemption laws,
meaning, there are certain things in Nevada, which the Legislature
considers necessary for a person to live.
In Nevada, an unsecured creditor cannot enforce a lien against
your house unless you have more than $550,000 in equity. (Equity
is the amount the house is worth after deducting the amount of
any mortgage or taxes owed against it.) Social Security and certain
Veterans benefits are exempt from bank garnishments. You can exempt
up to $1,000 of otherwise non exempt funds from a bank garnishment.
75% of your weekly wages are exempt and all wages below 50 times
federal minimum wage are exempt (as of January 1, 2009 the minimum
wage is $5.85 x50=$292.50. Exempt wages remain exempt when you
put them in your bank account if traceable. There are many other
exemptions under Nevada law. If a creditor has a judgment and is
attempting to collect on that judgment, you need to consult a lawyer
to assist you in preserving these exemptions.
Should I file for Bankruptcy?
In most cases, if you do not have a regular income and all of
your assets are exempt under the law, it may not make sense to
file bankruptcy. You are what is called “judgment proof”. This
means that even if you are sued and the creditor obtains a judgment,
the creditor cannot make you pay the judgment because of the protection
of asset exemptions.
However, if you have assets over the exemptions, or you owe secured
debt, you may want to look into filing for bankruptcy protection.
This decision is a complex one and you should be assisted by an
attorney who can guide you in the right direction.
Be very careful about services which advertise that they can help
you prepare bankruptcy forms for a very low price. These services
are prevented by law from giving legal advice. This means that
you are probably not going to get the benefit of the exemption
laws. It also means that you could do something which will harm
your ability to discharge your debts –which is why you are filing
for bankruptcy in the first place.
Can I stop bill collectors from hounding me?
Yes. Under the federal law known as the Fair Debt Collection Practices
Act, bill collectors generally cannot call you before 8 a.m. or
after 9 p.m. without your permission. For the most part they cannot
call you at work and they cannot call someone else regarding your
debt. Bill collectors cannot harass you, tell you lies or use foul
language when they call you. Please call a lawyer if this happens.
You have the right to have the bill collector verify the debt and
bill collectors must cease communicating with you if you tell them
in writing to stop contacting you. If they continue to contact
you, see a lawyer
Can a creditor take my Social Security payments?
Social Security proceeds are not generally subject to collection
by creditors. Make sure you can trace your social security and
other exempt funds when you place them in an account with non exempt
funds.
Can I lose my home if I don’t make payments?
Yes. Your home is likely to be the subject of a foreclosure if
you do not pay your mortgage payments. A homestead does not protect
your home since the home is security for the debt. However, if
you can no longer afford your payments, whether because of the
loss of a spouse, reduced income upon retirement, unforeseen increases
in monthly payments or for many other reasons, lenders may be willing
to modify your mortgage. This can be done in a variety of ways.
They may reduce interest rates, extend the term of the loan or
hold some of your obligation till the end of the loan so your payments
are affordable. You should contact your lender as soon as you think
you will have difficulty maintaining your payments. You should
do this before you receive a Notices of Default or Notice of Sale.
If you have not been successful with your lender by this time please
see a lawyer or a housing counseling agency. Many resources now
exist to help a homeowner at risk of foreclosure including the
Washoe County Senior Law Project (see Resources)
Many current mortgages are sub prime mortgages and may contain
what may be considered predatory terms such as adjustable interest
rates and teaser rates which call for large increases in monthly
payments after a few years. Even if you have a loan which seems
unfair your home can still be foreclosed upon. If you discover
that you have a loan that you will not be able to afford in a few
years, please see an attorney as soon as possible.
There are additional options you can pursue if you cannot afford
your loan. Most lenders will allow you to conduct a “short sale”
(a sale in which the purchaser pays less than you owe) and release
you for the unpaid portion of the mortgage. This forgiven debt
will be considered income by the IRS but may be waived. See a housing
counselor or tax advisor to help you. If your payments are high
but you have sufficient equity, refinancing into a new loan or
into a reverse mortgage (see making ends meet section) may be helpful.
However avoid rescue scams (see Nevada Attorney General web site
http://ag.state.nv.us/main.htm) and if you refinance do not choose
your lender based on mailers or telephone solicitations. If you
don’t understand the terms, make sure you have an independent and
trustworthy person review them with you. |
