My Bank Won't Work With Me So I Can Pay My Debt

Question:

Dear Steve,

The bank called me and told me that I must pay 12600 first before I can apply for account restructuring with an interest rate of 1%. I was not able to pay it as of now because I am jobless.

What should I do or how should I respond to the threats of a law firm that they will file a case against me if I failed to settle the said amount.

I have no intention of running from my my obligation that is why I constantly coordinate with the bank.

How should I do or how should I respond to the threats of a law firm that they will file a case against me if I failed to settle the said amount. I have no intention of running from my my obligation that is why I constantly coordinate with the bank.

Please advise.

Answer:

Well you ask a wonderful question.

The issue is really a conflict between the desires of the bank, the written agreement to borrow, and reality.

Lending agreements are written in absolutes. The lender expects you to deliver $X payment by a certain date each month. And that's a wonderful expectation but life doesn't work like that. Life is full of unexpected surprises that create havoc and misfortune.

So the lender can demand the moon. It's their right. But it's also your right to be honest with them and tell them what your current reality is. It is what it is.

I completely understand the desire to repay the loan and satisfy the bank. But here you are faced with the right of the lender to sue you and the goal of you to be able to meet your basic requirements of life.

People incorrectly state all the time that bankruptcy should be a last resort. That is simply not true. Your situation is a good example where bankruptcy should be among the options to consider in a logical way. You see, consumer bankruptcy is one of the only tools you have to actually gain some control over the situation. If you do end up filing bankruptcy, the collection activity must stop, they can't sue you, and the debt will be forgiven tax free.

For those people who have an overwhelming desire to repay any debt. Bankruptcy does not prohibit you from repaying the lender for emotional reasons once it is legally discharged by the bankruptcy court. But don't be surprised if the bank asks you to not repay them. They've already written it off and moved on.

If you do not meet with a local bankruptcy attorney, who is licensed in your state, then you can evaluate your other options.

Those options include waiting to be sued if you can't work out a mutual solution with the bank. Once you are sued you can challenge the validity of the debt and ask the lender to prove the debt is legitimate. You can attempt to work out a settlement during the lawsuit process, but if you can't pay now you might not be able to pay then. Finally, you can be sued, lose, have a judgment awarded against you, and potentially have your wages garnished. The amount you owe will continue to build interest.

I'm often accused of suggesting bankruptcy too often but the reality is far too few people take an honest look at the reality of their situation and their options. Bankruptcy isn't a "walk away" tool, it is the only tool to give people some power and control in an otherwise imbalanced situation.

For more on bankruptcy, you might want to take some time to review the many articles below. They are filled with good information to help people truly understand the truth about bankruptcy.

Now I will admit there are probably far too many links below but I really want you to fully understand what bankruptcy means and not suffer from bad choices from misperceptions. Please grab a favorite beverage, relax, and work your way through the articles so then you can help others crush the popular myths and misperceptions about a legal fresh start from problem debt.

Bankruptcy Articles and Posts You Must Read to Understand the Truth About Bankruptcy

Bankruptcy Advice

Life After Bankruptcy

Filing Bankruptcy Yourself

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.