Debt is an overwhelming issue for many people. Credit card debt stacks up quickly, and many people have more credit card debt than savings. The remnants of financial irresponsibility can haunt us for quite a while unless we do something about it.

It’s easy to fall into the trap of spending more than we have available. Credit card offers and loans seem to fall into our laps, and it seems harmless to pursue them until something happens that affects our ability to repay those loans. We could lose our job, or a medical emergency could spiral us out of control. Whatever the cause, debt relief is a real need when that happens.

Before embarking on any attempt at debt relief, you should consult an experienced attorney who is qualified to help you with your debt relief efforts. Debt relief programs in Georgia are varied in their approach to solving debt-related issues, and an attorney can help you find the right program for your situation.

Statute of Limitations on Debt Collection in Georgia

Believe it or not, there is a statute of limitations on the amount of time a debt collector has to attempt to collect a debt from you in Georgia. If the debt collector waits too long, you can’t be held accountable or sued to settle the debt.

Most of the debts in Georgia have a statute of limitations of four years. That includes credit card debt, medical debt, and car loans. Mortgage debt has a statute of limitations of six years. State tax debts have a statute of limitations of seven years.

One thing to be aware of is that you should pay attention to the statute of limitations, and if they end, don’t make any payments or promises to pay. If you do those things, the statute of limitations will reset. Debt collectors can sue you for payment if you reset the statute of limitations.

5 Types of Debt Relief Programs in Georgia

Many who are struggling with overwhelming debt wonder what they can do to fix their problems. There are five approaches to debt relief in Georgia. These include debt management, debt consolidation, debt settlement, nonprofit debt settlement, and bankruptcy. Here is a brief overview of the options and how they work.

Debt Management

A debt management plan works with lenders to lower the interest rates on credit cards. A typical credit card comes with an interest rate of around 16.7%. If you miss one payment, your interest rate can increase to about 25%. If you miss more than one payment, those rates keep growing.

A debt management plan helps you reduce interest rates to 8%. One plus for using a debt management plan is that your credit score isn’t considered for enrollment in one of these programs. You have an opportunity to be free of debt within five years, provided you make on-time payments each month. If you choose, you can quit the program, which gives the credit card company the right to raise interest rates back up to 25-30%.

Debt Consolidation

Debt consolidation is a loan that you use to combine multiple payments into one payment. So, instead of three or four credit card payments, you have one payment to your bank or credit union. Interest rates for these loans depend on your credit score and whether you want to use the property as collateral for the loan.

With these loans, you have taken one big loan to pay off several small ones, and you still have the same amount of debt. You also still have access to your credit cards, so if you don’t stop using them, you can find yourself in more debt trouble than before. Also, you must have creditworthiness to qualify for the loan in the first place.

Debt Settlement

Consumers can use debt settlement to pay off debts for less than what was initially owed. Payment for these plans is typically made in a lump sum, and you must first save money for two or three years in an escrow account while you negotiate with creditors for an agreeable plan. These debt relief plans can take a while to set up, and it affects your credit report for seven years.

If you have more than $600 of debt forgiven under one of these debt relief plans, the IRS considers that to be income that you must then file on your taxes. The way these plans work is relatively straightforward. You or your representative negotiates an amount that’s agreeable to the credit card companies, and you stop paying the minimum payments to them. Instead, you pay into an escrow account that is used to pay the accounts once it’s large enough.

Credit card companies often refuse to deal with debt settlement companies. The debt settlement company also charges a fee, plus you still accrue interest and late payment penalties on the accounts while you pay into escrow.

Nonprofit Debt Settlement

Nonprofit credit counseling agencies created nonprofit debt settlements in 2021. The premise is the same as other debt settlement companies, but it’s done differently than with traditional debt settlement programs. Lenders agree to the terms of the settlement upfront.

Using one of these debt relief programs in Georgia requires that specific rules are followed. One of those rules is that the consumer can not make a credit card payment in the previous 180 days. You must pay a fixed amount for 36 months. There aren’t any extensions, all payments must be made on time to stay in the program, but you can pay the debt early.

These accounts don’t accrue interest during the repayment period. If you miss a single payment, your program is canceled, and you are subject to the original terms and interest rates assessed by the lender.

Bankruptcy

The best debt relief plan for some people is bankruptcy. Bankruptcy is a kind of restart to your financial well-being. There are two kinds of bankruptcy that people generally select from: Chapter 7 and Chapter 13. Chapter 7 requires the liquidation of some assets, while Chapter 13 requires the creation of a payment plan that satisfies debts that can’t be discharged.

Bankruptcy can significantly impact your credit score by causing it to drop by 100-200 points. Your credit report will reflect the bankruptcy for 7-10 years. These factors can make it harder to qualify for new credit later.

Who Qualifies for Debt Relief in Georgia?

Each method has its own criteria, but some things are common to all methods of debt relief. For any of the methods of debt relief in Georgia, the number one qualification is that your credit accounts are overwhelming you to the point that you are behind on payments. Ideal candidates don’t have enough money saved to be able to pay their debts in full.

You must be able to demonstrate that you are unable to pay your debts in full and that you understand how taking debt relief measures will affect your credit. Many debt relief programs require you to pay monthly payments to satisfy your debts. Typically, you must be a minimum of 90 days behind on your payments before debt relief programs will consider you a viable candidate.

You will need to provide information regarding your income and your other debt liability when you are pursuing debt relief options. To that end, you should gather several paycheck stubs (two or three that show a typical work week), information regarding your spouse’s income, information about any debts you owe (what it is, who the lender is, what the payment is, the overall balance, and when you last made a payment), and your monthly expenses including both fixed and variable costs. When you’ve gathered all the information, do the math to determine what you have coming in above your typical bills. If you don’t have any excess income, you may need to discuss methods that don’t require making payments to creditors, like Chapter 7 bankruptcy, with your debt relief attorney.

Benefits of Hiring a Professional to Help You Choose the Right Debt Relief Programs in Georgia

You have the option of negotiating your own debt settlement terms. However, it’s beneficial to hire someone with experience to assist you with the process. Hiring someone to help you negotiate your debt settlements allows you to converse with someone who can provide you with much-needed advice.

When you work with an attorney who specializes in debt relief in Georgia, you will have someone in your corner who can understand your position without becoming overly emotional through the process. It’s often helpful to have someone who is removed slightly from the situation assist you with negotiating with your creditors. They will be able to remain rational in the face of dealing with creditors because they are experienced with debt negotiations and have no personal attachment to the situation.

The debt relief process is time-consuming. It can also be overwhelming, particularly if you attempt to do it on your own. Having a debt relief attorney help gives you someone to do the work in the background while you take care of other responsibilities.

Closing Thoughts

Are you looking for debt relief solutions in Georgia? If you have questions about the process or if you’d like to request a consultation, contact the qualified professionals at Morgan & Morgan.

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