It’s been a wild ride recently. The pandemic is finally easing, after causing death, hospitalization, unemployment, and ballooning debt. The government and some lenders tried to ease the pain with stimulus payments, child tax credits, eviction moratoriums, and a temporary freeze on foreclosures and garnishments. Some mortgage lenders allowed borrowers trial periods with lower payments, sometimes followed by permanent modifications to cure defaults.
Aggressive collection activity has always driven consumer bankruptcy filings. Collection activity fell dramatically during the pandemic, down 25% in the Northern District of Georgia in 2021. Now, mortgage interest rates are climbing, and mortgage lenders are less willing to agree to workouts and forbearance agreements. Rent, automobile prices, and the price of groceries are increasing dramatically. The cost of gasoline is the highest in history. Stimulus payments have ended, along with enhanced child tax credits.
After a pause, the debt collection process is resuming with a vengeance. Debt collectors are gearing up with collection calls, foreclosures, repossessions, lawsuits, and garnishments. The state courts are open for them. (So far in 2022, all bankruptcy hearings in the Northern District of Georgia are still being done by brief telephone calls, which is less stressful than appearing in court, more convenient, and prevents missing time from work).
Chapter 13 is used to force lenders to allow you to catch up on delinquencies over a period of years, whether they agree or not. Chapter 13 does not put property at risk, because a payment plan substitutes for a so-called “liquidation” of property of the estate.
One consistent benefit of filing any kind of bankruptcy is speed. Most debtors try to find financial solutions without filing bankruptcy, but delays and red tape might eliminate your options. If all else fails, you can gain time, and stop imminent collection actions by filing a bankruptcy… which instantly stops lawsuits, repossessions, garnishments, and foreclosures.
Succeeding in your case still depends on good communication with your lawyer. It’s important to choose a lawyer who answers the phone, and who returns calls and emails promptly. You should always prefer a patient listener to a fast talker and prefer a straight talker to a smooth talker. Your lawyer needs for you to be honest because creative problem-solving starts with hard facts, not wishful thinking. Finally, choose a lawyer who is knowledgeable about local rules and practices.
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