Bankruptcy and homeforeclosure can be challenging issues for many individuals and their families.While being in debt can be a stressful situation for many people, there are avariety of debt settlement programs that can be used to help an individualrecover his or her finances. In addition, many judges can work with anindividual to find a debt repayment plan that works for him or her. Thefollowing guide explores how judges handle cases related to debt.
In most cases, judges will work with a debtor if he or she has not had severedebt-related issues in the past. However, judges will usually become lesslenient if an individual is not able to resolve his or her problems after areasonable length of time.
For example, imagine that a homeowner has accumulated lots of credit card debtrelated to medical bills. In most cases, a judge can be used to mediate betweena debtor and a creditor. In some cases, a creditor may be able to agree on adebt repayment plan that splits out a large debt into reasonable monthlypayments. If a homeowner breaks this agreement, there can be severeconsequences.
If an individual fails to follow the terms of a contract during a debtmediation case, he or she may have a lien placed on his or her property. Forexample, a very large medical or credit card debt may result in a lien on ahome, vehicle or other fixed asset. While the court can't seize this asset, itcan't be legally sold without repaying the debt. When an individual sells hisor her property, he or she will be required to pay back that debt beforereceiving money from a sale.
In addition, a judge may decide to take part of an individual's salary as partof a debt repayment plan. In many cases, this process is known as garnishment.However, garnishment is usually only used when an individual has a significantamount of debt that hasn't been paid for a very long time. Since garnishing toomuch of one's wages may prevent them from maintaining a home or car, excessivegarnishment can cause the loss of a job. To avoid this, most judges willgarnish 30 percent or less of one's wages. However, this can increase ordecrease based on one's overall income.
In some cases, a judge will be legally allowed to seize physical assets like ahome or vehicle. However, this is usually only done when a home, vehicle orother physical asset was purchased with a loan. Since an individual doesn'tfully own these types of properties, they can be legally seized as part of adebt repayment program.