Dealing with Debt
Perhaps your debts have become unmanageable now that you are living on a fixed or more limited income. Maybe the unexpected costs of medical treatment or prescription drugs have pushed you to the brink. How you deal with the situation will depend on your particular circumstances.
What should I do if I am having trouble paying my bills?
You could contact your creditors and ask for more time to make payments. It might help to call a credit and debt counseling agency as well. Keep in mind that if you wind up filing for bankruptcy, you will be required to complete such counseling from an agency approved by the U.S. Trustee Program.
Be cautious about obtaining a debt consolidation loan to pay off your debts. If the interest is too high, you could wind up with an even bigger problem. And if you do get a loan, make sure that the financial statements turned over to the lender are true and complete.
What are credit and debt counseling agencies?
If you are in debt and finding it difficult to pay your bills, credit counseling can help. Reputable credit counseling organizations advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting.
Counselors should discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
A reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If a firm doesn’t do that, consider it a red flag and go elsewhere for help.
Check out a potential agency with the Arizona Attorney General’s Office at (602) 542-5763 (Phoenix), (520)628-6504 (Tucson), or (800)352-8431 (Outside Phoenix and Tucson), and the Better Business Bureau (602)264-1727 or (877)291-6222. They can tell you if consumers have filed complaints about them although this is not a guarantee that they’re legitimate. The Department of Justice on-line maintains an approved list of credit counseling agencies by State.
What will happen if I simply don’t pay my debts?
If you signed an agreement putting the property up for collateral (securing the debt) when you bought it, the creditor could repossess the item. Even in the case of unsecured purchases (purchases made with credit cards, for example) the creditor can obtain a court judgment and the property can be repossessed, your wages attached and your bank accounts seized. (A.R.S. § 44-1007)
In addition, if you own a home, a lien could be placed on your property for an unpaid debt. You may, however, be able to file a claim of exemption for your home.If you are generally not paying your debts, you are presumed to be insolvent (the sum of your debts is greater than the fair value of your assets), and certain new debts you incur may subject you to other problems. (ARS §§ 44-1002, 1004)