Summary: Are you unable to pay your debt because of a disability? Find out what you can do to keep the debt collectors away.
Life can be very difficult for those with a disability, and if you find yourself in debt it can get a lot worse. If you are living every day with pain, then you may have a way out of your distressful credit card debt. Whether you are living with a reduced income, limited opportunities to obtain a job, or the inability to work, your financial situation may be getting worse. Rather than declare bankruptcy, you may have other options.
You can be sued for credit card debt when on disability, but the end result is that they will not be able to actually collect on the judgment if your income is protected. The only downside is that you will still have a judgment placed on you, and it may hurt your credit. There are a few defenses if you are suffering from credit card debt and on disability.
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You could be judgment proof
If you have been receiving social security income as a disabled person, then you may be judgment proof. Being judgment proof means that a creditor may not garnish your wages or place liens on your property if they sue you.
For a creditor to be able to garnish social security income, they must sue you, but most of the time they cannot do so under federal law. Although it is not impossible to have your social security income garnished, it is unlikely. It will take a long time in court and typically the cost is not worth it for them.
You might have garnishment protection
Garnishments involve taking money directly from your bank account, or from your paycheck. The federal law requires that twice the amount you receive in disability payments be exempt from wage garnishment. This means that if you receive $1500 each month in your account, you should have at least a minimum of $3000 in your account. This cannot be taken from you.
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Tell debt collectors to cease and desist
When you are dealing with a debt collector, you may have been pursued various times, repeatedly. If this is something you have dealt with, you may not realize that you can simply ask a collector to stop contacting you.
This is called a “cease and desist”. It can be in the form of a letter, but you can also ask them to stop and they are required to do so under the FDCPA. The FDCPA (Fair Debt Collection Practices Act) provides protection against creditors. If you specifically request they cease and desist, they must comply, punishable by law.
You could be eligible for a hardship plan
There are financial relief options for those who have a permanent disability, but it does not mean that credit card debt will disappear if you qualify as disabled. You have one main option to consider. That is to find a hardship plan.
Credit card companies would prefer that you pay your debts in full, but this is not always possible. If a credit card company believes that you are unable to pay your debts and that they will end up getting nothing, they might change their mind about what you owe them. Not literally, but they may allow you to negotiate how much you plan to pay them, and decide on a settlement. You can base this on the fact that you are disabled, and that you cannot afford to pay. Overall you may be able to reduce the amount of the debt as well as your interest rate.
The best way to develop a hardship plan is to create a list of your income and subtract your monthly expenses. Then you can call each creditor and explain your finances. If you can provide a description of your income and expenses to showcase why you cannot pay your debts, they may be willing to negotiate to make your payments easier to pay off.
This stems from the creditors having to abide by a hardship plan in their company policy. This is to help those who cannot pay off their loans or debt. You can also see if the creditor offers any type of cancellation policy. Sometimes these are available in case of death or disability. Overall, if you can find a way to lower your interest rate or extend the payment period then you will reduce your overall debt commitment and make it easier to pay off.
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Other debt-relief options
- Debt consolidation: This is a great idea if you have not been able to find a way out of your debts due to being disabled. It is the process of consolidating all of your debts, such as credit card payments, mortgage payments, and car payments, into one monthly payment. The hope is that you can get a lower interest rate as well. The main purpose is to avoid being in default, decrease the amount of interest you are paying, and reduce the damage to your credit score.
- Filing for bankruptcy: Although it should always be used as the last option, bankruptcy will wipe your responsibility for your debts. Filing for either Chapter 7 or Chapter 13 will have different outcomes and are useful in different situations. If you own property and wish to keep it, then Chapter 13 might be a better idea. It is essential to look at the pros and cons of each before making this decision.
If you are disabled, it can be difficult to make ends meet, and it is common for credit card bills to pile up. Rather than allow these problems to take over your life, it is better to face them head-on and find a solution. Debt relief due to disability may be an option for you, or you may be able to come to a settlement. You will only know if you try.
What is SoloSuit?
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate
>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance
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