Practical Debt Advice That Works: Obtaining Debt Relief Without Hurting Yourself

I just read about a tragic and avoidable event that happened last week. According to The Washington Post, a Manhattan couple jumped to their deaths from the ledge of their 9th floor apartment. The couple, a chiropractor and his wife, reportedly left a suicide note citing their ever increasing debts as the reason for their despair. Apparently, they were good people; They were well liked by their friends and patients. They are survived by their two children. ( See The Washington Post, July 29, 2017.)

After reading this article, I was immediately taken back to the events of 2008 and the devastating financial wake of the Great Recession. Many businesses and lives were ruined – all because of debt. I know. As the chief enforcer / attorney for several national lending institutions, I was in the thick of it. I was responsible for the collection of billions in defaulted loans and my job was to vigorously pursue delinquent debtors and ‘cure’ non-performing loans.

Even in today’s economy there are still people who struggle financially for a number of reasons that include, but are not limited to, underemployment and stagnant wages. Here are 5 things I wish to impart to those who are burdened with mounting debt and the ever-advancing debt collectors:

1. Communicate.
While it may not feel good, keeping the lines of communication between creditor and debtor benefits both parties. Believe it or not, banks and creditors want to work out payment arrangements as opposed to litigation. Ignoring and avoiding creditors gives a creditor no alternative but to escalate a collection action. This increases debtor anxiety and reduces opportunities for a reasonable settlement.

2. Contact a professional early in the process.

For those who are uncomfortable with negotiations or confrontation, contacting a professional about a debt issue may be the answer. For small loan balances, reach out to a non-profit credit or debt counselor early in the process. Larger note obligations or guarantees require the attention of a seasoned professional.

I am frequently retained by clients only after they have already been “steam rolled” by their creditor. These clients thought they could “go it alone.” I can tell you that cleaning up a legal and financial mess after the fact is far more challenging and expensive than when someone comes for legal advice at the onset of their problem. (See my article, “Just What Is The Law of Holes?” at http://bit.ly/prholes). Dealing directly with a creditor without proper representation is not the best approach and most often costs a debtor more money in the long term.

3. Don’t bring a knife to a gunfight.

The American Bar Association lists over 75 practice areas of law. Not all attorneys specialize in debt or loan law. Speaking with the appropriate attorney can prevent costly mistakes. While at the banks, there were many occasions that I had the pleasure of sitting across the table from a debtor’s divorce attorney or personal injury attorney. It made my job easy and I welcomed them. The old adage, “don’t bring a knife to a gunfight” is never more true than in lending and finance law where debt agreements are usually complex and highly regulated.

4. Beware of scam artists – they’re everywhere .

Avoid individuals and companies that aren’t properly credentialed and that have not been rated by their industry peers. In fact, when it comes to consumer issues, almost all professionals working with the public require a state or federal license. Verifying an adviser’s competence and reputation should be a debtor’s top priority. Today as I sit to write this article, The Washington Post features an article about how a California modification scam recently swindled thousands of homeowners out of their home equity, and many lost their homes because of it. Remember: “Trust but verify.”

5. It really will be okay.
Sure it sounds simplistic and trite, but with the right professional guidance and some patience, the sting of debt issues subsides over time. There are many ways to successfully approach serious debt issues without filing bankruptcy, such as seeking a court ordered installment payment plan, graduated settlement options, structured debt forgiveness, and being declared ‘uncollectable.” To learn more about these and other options one has to actively seek help. (According to a CreditCards.com poll, 85 percent of respondents said they were unlikely or somewhat unlikely to talk with a stranger about credit card debt — a subject that is more taboo than religion, politics, salary and love life details.)

Conclusion. Nothing is more professionally and personally gratifying than helping a business owner or individual through the darkness that is mounting installment or revolving debt. I have ushered thousands of people through their debt issues, without bankruptcy, and after they successfully enter into a negotiated settlement, the difference in their demeanor is truly night and day. Once debt problems are resolved, it is as if you can see the heavy financial burden lift off a client’s shoulders. I only wish the poor couple from Manhattan could have known this relief as well. R.I.P.

About the Author: Since 1990, Michigan attorney David Soble has represented lenders, loan servicers, consumers and business owners with legal matters related to finance and real estate. He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his clients.

Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.

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