Crush Debt Now! Unveiling the Secrets to Financial Freedom
00:00:16 Todays featured book: Crush Debt Now!
00:00:56 Unveiling the Secrets to Financial Freedom
00:04:22 Basic Terminology
00:07:25 How do Debt Collection Agencies Work?
00:09:11 How do Debt Collectors Operate?
00:11:54 Judgment
00:19:35 Seizure of Property
00:25:02 Foreclosures
Crush Debt Now! A 3-Step Negotiation Strategy to Pay Off Debt and Win
Financial Freedom Fast (Personal Finance Wizard Series) By: Tom Cromwell
Hear it Here - https://bit.ly/crushdebtnow
https://www.amazon.com/Crush-Debt-Now-collection-negotiate-ebook/dp/B08LN76V6S
In this eye-opening episode, we dive into the world of debt collection
and empower you with knowledge to take control of your financial future.
Learn from expert Tom Cromwell, author of "Crush Debt Now!" as he
shares valuable insights on navigating the complex world of debt
repayment.
Discover the basic terminology used by debt collectors and understand
the difference between delinquent, line default, and judgment. Uncover
the strategies employed by debt collection agencies and how they operate
to collect what's owed. Explore wage garnishment and seizure of
property, learning about debtor assets that are seizable in such cases.
Delve into the process and consequences of foreclosures, arming yourself
with knowledge to make informed decisions.
Transcript
Hello, listeners!
Speaker:Welcome to "Voice Over Work," your audiobook sampler, on this beautiful April 22nd, 2025, just days away from Earth Day.
Speaker:Todays featured book:
Speaker:Crush Debt Now!
Speaker:A 3-Step Negotiation Strategy to Pay Off Debt and Win Financial Freedom Fast (Personal Finance Wizard Series) By: Tom Cromwell
Speaker:7 00:00:29,240 --> 00:00:31,120 Here's some lighthearted text about this book:
Speaker:9 00:00:31,120 --> 00:00:35,280 "Hey there, if you're drowning in debt and those pesky creditors won't leave you alone, this book is your life jacket!
Speaker:It'll teach you how to swim towards financial freedom with a three-step strategy that has helped loads of people just like you.
Speaker:No more stressful phone calls or court threats; it's time to take control and say goodbye to those money worries once and for all!"
Speaker:Or maybe something a bit more direct:
Speaker:14 00:00:44,400 --> 00:00:46,120 "Tired of those debt collectors breathing down your neck?
Speaker:This book is the secret weapon thousands have used to kick their debts to the curb!
Speaker:With its step-by-step guide, you'll be debt-free in no time.
Speaker:So, what are you waiting for?
Speaker:Grab it and wave goodbye to financial stress!"
Speaker:Todays episode:
YouTube Headline:"Crush Debt Now!
YouTube Headline:Unveiling the Secrets to Financial Freedom"
YouTube Headline:Hey there!
YouTube Headline:Are you ready to dive into some crucial money matters?
YouTube Headline:Because today's podcast episode is a real eye-opener for anyone who wants to keep their hard-earned cash and their beloved home.
YouTube Headline:We'll be chatting about the importance of responding to legal stuff like summonses, and why ignoring them can lead to some pretty nasty consequences.
YouTube Headline:It's also time to talk tactics on how to avoid losing your house or having your wages garnished - yep, we're getting real here!
YouTube Headline:So grab a cuppa and get comfy, because this episode is going to be an essential listen for anyone wanting to stay one step ahead of the game.
YouTube Headline:In this chapter we are going to look at the process you will experience when creditors turn their debt collection tactics onto you.
YouTube Headline:A subsequent chapter will then talk you through some of the strategies you can employ to fight back.
YouTube Headline:So, you have realized that you are neck-deep in debt, are struggling with minimum payments and suddenly your creditors are hounding you from every side and making demands.
YouTube Headline:This is very common, about 15% of Americans, or nearly 50 million people said that they had been sued by debt collectors at some point, a staggering number.
YouTube Headline:You can expect the debt collection process to begin once you are 30 days overdue if you make no payment.
YouTube Headline:It will probably start with a letter or email, and the calls will start shortly thereafter.
YouTube Headline:Initially, the calls are likely to be with a customer service team rather than specialist collections teams.
YouTube Headline:Each organization varies, but the debt will not normally be transferred to the collections teams until it is between 60 and 90 days overdue.
YouTube Headline:At this point, if you haven’t spoken to them, then you will probably get other emails or letters too.
YouTube Headline:Some banks or lenders will continue to manage the collections and recovery process in-house, until such point as they sell the debt.
YouTube Headline:Other lenders will outsource this to an agency at an early stage.
YouTube Headline:More banks are dealing with this in-house for longer, especially secured creditors.
YouTube Headline:All debt collections calls will have similar characteristics.
YouTube Headline:Those from agencies rather than the original lender are likely to be more aggressive and try to use scare tactics to persuade you to pay.
YouTube Headline:We have a section below on how to manage these calls and talk through what to do and what NOT to do.
YouTube Headline:The process is similar regardless of who is making the calls
YouTube Headline:45 00:03:24,440 --> 00:03:32,840 From 30 days overdue, your lender will begin to report your debt as overdue to the credit bureaux and this will begin to impact your credit rating.
YouTube Headline:More discussion of this in the next chapter.
YouTube Headline:For unsecured debts (e.g.
YouTube Headline:credit cards, store cards, medical, private student loans), at some point in the process - if the lender has exhausted their own remediation - they may sell the debt on to a debt collection agency (your account is then in collections).
YouTube Headline:This may also happen for some secured lending too, but they may manage foreclosure proceeding internally, only selling the debt if these fail.
YouTube Headline:At some point (possibly around 90 days plus overdue) lenders may instigate legal proceedings.
YouTube Headline:You may be served writs to attend a court hearing, as a result of which the lender may obtain a judgment against you to recover the debt.
YouTube Headline:That essentially is the process, after that point, it will be dependent very much on the type of debt.
YouTube Headline:Basic Terminology
YouTube Headline:55 00:04:27,040 --> 00:04:33,360 There are a few terms that we will commonly use throughout the book, but may not be widely understood.
YouTube Headline:There is a more comprehensive glossary at the back of the book but that is more tricky to use on e-readers, so I wanted to include selected terminology here:
YouTube Headline:58 00:04:42,760 --> 00:04:52,480 * Creditor: This is the bank/lending institution (or a personal acquaintance in bankruptcy proceedings) that a debt is owed to.
YouTube Headline:* Original Creditor (OC): The creditor to whom the original debt is owed to.
YouTube Headline:This is very important when dealing with debt collection agencies (DCA).
YouTube Headline:* Debtor: This is the person (or business) that owes a debt to a creditor.
YouTube Headline:* Credit Reporting Agency: These are the 3 major reporting agencies or credit bureaux: TransUnion (TU), Equifax (EQ), and Experian (EXP) which list, and then report the history of your credit
YouTube Headline:64 00:05:23,840 --> 00:05:28,800 Delinquent & Default
YouTube Headline:66 00:05:28,800 --> 00:05:32,640 Delinquency occurs when a borrower fails to make a payment on their loan.
YouTube Headline:Whereas, default happens when a person fails to repay their loan as stated in the contract.
YouTube Headline:Creditors usually allow loans to remain delinquent, before considering them in default.
YouTube Headline:However, this depends on the type of loan and the creditor involved.
YouTube Headline:Many consider mortgages to be delinquent once they are 90 days (3 months) behind in payment.
YouTube Headline:Once you hit 90 days overdue with a payment, your loan will be reported to the main CRA as officially delinquent.
YouTube Headline:Just one collection account (usually accounts that are officially delinquent are moved to collections) can cause a credit score to drop 50 to 100 points, but this won’t last forever.
YouTube Headline:Unless there are new negative events, your score will steadily improve over time.
YouTube Headline:Collections may remain on your credit report for seven years from the date of the original delinquency.
YouTube Headline:This statute of limitations holds true for both paid and unpaid accounts (with few exceptions).
YouTube Headline:Sometimes you can negotiate with a CA to remove the entry in a ‘Pay for Delete, however, they don’t have to agree to this, and in some cases, they are not able to do so, as it is the prerogative of the OC.
YouTube Headline:Once you are 270 days overdue, it will be considered to be in default, and at that point, many lenders will charge it off.
YouTube Headline:That is to say, it will be written up as bad debt in their financial accounts.
YouTube Headline:Again, this is a rule of thumb and can’t be considered hard and fast for all loans and situations.
YouTube Headline:Note that the U.S. federal government allows student debt to be delinquent for 270 days before declaring it to be in default.
YouTube Headline:Very often, this will be the point the original lender will sell the unsecured debt to a debt collections agency.
YouTube Headline:Federal student debt is not treated in the same way, although a collections agency may be retained.
YouTube Headline:Being in default will also be reported to the CRAs.
YouTube Headline:How do Debt Collection Agencies Work?
YouTube Headline:Debt collection agencies (DCAs) are businesses that are tasked to collect debts on behalf of creditors or lenders.
YouTube Headline:In other words, debt collection agencies act as middlemen between debtors and lenders.
YouTube Headline:There are two main types of DCA, namely hired collection agencies and agencies that buy debt from the original creditor.
YouTube Headline:* Hired Debt Collection Agencies
YouTube Headline:90 00:07:54,320 --> 00:08:01,960 These are businesses that are tasked to collect debts that are overdue by at least 60 days on behalf of a creditor or lender.
YouTube Headline:Hired debt collectors usually earn a percentage of the collected money, which varies between 25-50%.
YouTube Headline:These agencies usually act as middlemen who collect various types of debts, including car loans, medical bills, student loans, and even utility bills.
YouTube Headline:Hired debt collection agencies only get paid when they collect your debts and increase their earnings by collecting more debt.
YouTube Headline:* Debt-Buying Agencies
YouTube Headline:96 00:08:28,960 --> 00:08:40,280 When an original creditor has decided that pursuing debtors is not something they are prepared to do, they may opt to cut their losses by selling the debt to a debt-buying agency.
YouTube Headline:In most cases, creditors will bundle together several different debts with similar features and sell them to the buying agency as a package.
YouTube Headline:Debt-buying agencies usually purchase these packages through bidding.
YouTube Headline:On average, debt-buying agencies pay about 4 cents per every $1 of debt that they buy from a creditor.
YouTube Headline:This, however, can vary depending on the duration that the debt has been unpaid.
YouTube Headline:Older debts are usually priced much lower than recent ones since they are riskier and less likely to be collectible.
YouTube Headline:How do Debt Collectors Operate?
YouTube Headline:Debt collectors usually reach out to delinquent debtors via phone calls and letters to try and convince them to pay their outstanding debt.
YouTube Headline:In cases where debt collectors are unable to reach debtors through the information provided by creditors, they may resort to hiring private investigators to aid their search.
YouTube Headline:In addition to communicating with debtors, collectors also conduct investigations on debtor assets, which can be used as leverage in case the borrowers are unable to pay back what they owe.
YouTube Headline:Sometimes, debt collectors may report defaulting debtors to credit bureaus as a way of encouraging them to make payment.
YouTube Headline:Poor credit ratings can seriously affect a borrower’s credit score and make it difficult for them to secure loans in the future.
YouTube Headline:It is important to realize that debt collection is a legally recognized business.
YouTube Headline:So, if you are behind on your debt payments and collectors start calling you, resist the urge to lash out at them, ultimately they are just people going about their job.
YouTube Headline:In the next chapter, we will discuss how to handle these calls when managing our debts.
YouTube Headline:Help!
YouTube Headline:I am being taken to court!
YouTube Headline:First up, don’t worry, you are not going to jail.
YouTube Headline:Debtors' jails are something from a bygone age.
YouTube Headline:Getting served just means that you have been given notice of a lawsuit, You are served if you are handed a copy of the summons and complaint or someone of suitable age is handed a copy, at your address.
YouTube Headline:If the lawsuit is against you, you are the defendant.
YouTube Headline:If the lawsuit names you as a defendant, you must respond, even if you think the debt is not yours!
YouTube Headline:The person or party initiating the complaint is the plaintiff.
YouTube Headline:The summons and complaint (the process) are a statement of the claims against you and a notice of the lawsuit.
YouTube Headline:The lawsuit now starts even if it is not filed with the court.
YouTube Headline:This is important because it means there may not be a court filing number.
YouTube Headline:Therefore if you contact the court, they may tell you it has no record of the case.
YouTube Headline:But that does not mean the process has not started as the creditor has up to a year from the date of service to file with the court.
YouTube Headline:The language used by most collection agencies is designed to create fear - for them, that is part of the process because they want you to settle.
YouTube Headline:Once you are served with a lawsuit, you may be tempted to ignore it completely.
YouTube Headline:And if you fail to answer the complaint, the creditor can get a default judgment after the 20-day response period, which means you have lost the case before it begins.
YouTube Headline:You will not have a court date and you will not have an opportunity to talk to a judge if you decide not to respond.
YouTube Headline:Judgment
YouTube Headline:130 00:11:57,440 --> 00:12:05,040 A court will enter a judgment against you in case the creditor wins their case or if you fail to show up in court.
YouTube Headline:You will receive the notice of judgment entry via mail.
YouTube Headline:The creditor may use the judgment to collect cash.
YouTube Headline:Common methods used include garnishment (wages and bank accounts), property attachments (this can be any asset you own), and property liens (liens apply to the building and land).
YouTube Headline:State laws control the amount of money and types of property a creditor with a judgment can collect.
YouTube Headline:These laws vary state by state, so you need to check the laws that apply to you.
YouTube Headline:The initial debt amount may now include attorney fees, filing fees, interest, etc - anything related to the case.
YouTube Headline:Receiving a judgment resets the Date of First Delinquency (DOFD) automatically to a date the judgment was made, and it is the only solution for changing the DOFD.
YouTube Headline:The reporting time on debt (relating to the statute of limitations) is now seven years from the time the judgment was made.
YouTube Headline:The judgment stays active for ten years (or 20 years in some states).
YouTube Headline:Therefore, a collection agency has ten years to collect judgment owed.
YouTube Headline:In case they fail, a judgment to reset for an additional 10 years may be given.
YouTube Headline:This means the collection agency can reset the clock indefinitely until the debt is cleared
YouTube Headline:144 00:13:25,040 --> 00:13:30,040 Wage garnishments and Frozen bank accounts
YouTube Headline:146 00:13:30,040 --> 00:13:37,040 One of the strategies that lenders often apply to recover their money from a debtor is wage garnishment.
YouTube Headline:Once a creditor has obtained a judgment, they can then get a court order to enforce it.
YouTube Headline:This typically happens through a court that directs that your employer withholds a certain percentage of your paycheck and sends it to the person who is owed until all the debt is cleared.
YouTube Headline:Some of the most common sources of wage garnishment include student loans, consumer debts, and child support.
YouTube Headline:In all of these instances, your wages will be garnished until the debt is fully settled.
YouTube Headline:However, just because a court orders your paycheck to be garnished it doesn’t mean that you have no reprieve whatsoever.
YouTube Headline:As a matter of fact, the law puts caps on the amount that can be garnished from your wages in order to ensure that you still keep part of your earnings for your own personal use.
YouTube Headline:There are two types of garnishment which a court can order:
YouTube Headline:155 00:14:26,800 --> 00:14:29,360 i) Wage Garnishment
YouTube Headline:157 00:14:29,360 --> 00:14:35,720 This gives your employer the authority to slash off part of your paycheck and hand over the money to your creditors
YouTube Headline:159 00:14:35,720 --> 00:14:43,040 Wage garnishment generally happens when a creditor sues an individual who is indebted to them for non-payment and wins.
YouTube Headline:However, there are several instances when a creditor can enforce a garnishment without a court order, for instance, non-payment of child support or failure to pay federal student loans.
YouTube Headline:So, how much of your wage can be garnished by court order?
YouTube Headline:Well, this generally varies depending on the state that you live in.
YouTube Headline:Some states like California have a cap of 25% when it comes to wage garnishment.
YouTube Headline:For ordinary garnishments (those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour or $217.50).
YouTube Headline:So if your disposable weekly income is less than this ($217.50) you cannot have your wages garnished, but every single dollar earned above that can be seized until the point you earn more than $290, when it reverts to 25%.
YouTube Headline:Wage garnishments for child support payments usually tend to be very high, typically capping at around 60%.
YouTube Headline:Student loans, on the other hand, have much lower garnishment caps - normally peaking at 15%.
YouTube Headline:In some states, the law exempts debtors from wage garnishment if they are the head of a household or breadwinner for a family.
YouTube Headline:While filing for bankruptcy can provide some immediate protection against wage and non-wage garnishment, it does not protect the debtor from garnishment once a court has ordered a repayment plan for all the debts owed.
YouTube Headline:In instances where the money is owed for federal taxes, a court order is not required before a garnishment can be enforced.
YouTube Headline:Usually, the Internal Revenue Service (IRS) will send a Notice of Demand for Payment to the debtor.
YouTube Headline:This is followed by a Final Notice which provides the debtor with a 30 day period to clear what is owed.
YouTube Headline:If the payment is not completed by the debtor, the IRS will contact the debtor’s employer and begin the wage garnishment.
YouTube Headline:ii) Freezing your bank account - Non-wage Garnishment
YouTube Headline:176 00:17:02,200 --> 00:17:13,120 Creditors and federal agencies can seize your bank account and use the money contained therein to clear your debts, they do not always require a court judgment against you to do so.
YouTube Headline:For account holders who have their loan accounts at the same institution as their bank account, the lender can access your account(s) to pay the defaulted loans without filing a lawsuit or judgment.
YouTube Headline:When you sign for the loan, you give the bank full access to your account in the event of default.
YouTube Headline:Default is normally 270 days overdue, but actual timing would be defined in your loan contract and could be significantly less.
YouTube Headline:If they have a court judgment, other creditors can get the bank to freeze your account to repay what you owe.
YouTube Headline:The court order and judgment is sent to the bank and kept on file.
YouTube Headline:You’ll get notified that a creditor has levied your bank account.
YouTube Headline:The notice will describe the bank account and will explain how you can claim any exemptions that will allow you to keep some or all of your money.
YouTube Headline:If you owe taxes to the government, the IRS can freeze your bank account and it won’t be lifted until they are paid in full.
YouTube Headline:A frozen account means you won't have access to any of your money until the situation is resolved.
YouTube Headline:This means you can't take out any money and scheduled payments won't go through.
YouTube Headline:Because these payments will probably bounce, you'll incur a non-sufficient funds (NSF) charge.
YouTube Headline:If you have money in your account, this will deplete your balance.
YouTube Headline:If not, you'll dip into a negative balance, putting you into an overdraft.
YouTube Headline:In this case, you'll have to pay additional fees and interest to cover the shortfall.
YouTube Headline:There are some exemptions that allow you to keep some or all of your money even if a creditor has a judgment against you.
YouTube Headline:The amount you may keep from seizure depends on the total amount in your account, its source, and specific laws in your state.
YouTube Headline:Some federal benefits can't be seized like Social Security, Supplemental Security Income (SSI), or veterans’ benefits.
YouTube Headline:Under this law, the bank must protect two months’ worth of federal benefits if the funds were directly deposited into the account.
YouTube Headline:However, if the garnishment relates to the recovery of child support, spousal support, federal student loans, or federal taxes, the bank can freeze the funds, even if they come from Social Security.
YouTube Headline:SSI is protected from garnishment even if the debt is a government, child support, or spousal support debt.
YouTube Headline:Seizure of Property
YouTube Headline:199 00:19:38,280 --> 00:19:45,600 When a creditor moves to court, they have the right to stake a claim on your property in a bid to recoup their money.
YouTube Headline:However, just because a court makes a ruling that your property can be seized doesn’t automatically mean your property will be handed over to your creditor.
YouTube Headline:The creditor is obliged to discharge or satisfy the debt that is owed to them.
YouTube Headline:If you are in deep debt and at risk of getting your assets seized, therefore, you need to know which assets are seizable and what strategies you can employ to minimize the likelihood of asset forfeiture.
YouTube Headline:Once a judgment has been made by a court of law, the onus lies with the creditor to decide how to proceed with the forfeiture.
YouTube Headline:They will need to establish which assets are seizable.
YouTube Headline:This is normally accomplished through a judgment debtor’s examination, which helps to unearth the assets or properties that can be forfeited by the creditor.
YouTube Headline:In addition to this, the creditor should have a good understanding of the properties that are exempted from seizure.
YouTube Headline:Each state provides certain exemptions on a debtor’s assets that can be claimed by a creditor.
YouTube Headline:If all of the debtor’s remaining assets fall under certain limits, then the judgment may be rendered as hollow or unenforceable.
YouTube Headline:There are also asset protection trusts which allow you to transfer your assets to an independent trustee who shields them from creditors.
YouTube Headline:Alternatively, you can transfer your assets to a spouse’s name to put them out of the reach of creditors who may be trying to claim them.
YouTube Headline:As a rule of thumb, you should always keep your business assets separate from personal assets in order to avoid repossession by creditors.
YouTube Headline:Debtor Assets and Properties that are Seizable
YouTube Headline:214 00:21:24,440 --> 00:21:31,480 When most people think of seizable property, the first thing that usually comes to mind is real estate.
YouTube Headline:However, in a forfeiture claim, the assets that can be seized by a creditor include not only the house that you live in but also assets that you own such as cars, boats, and even hard cash.
YouTube Headline:In some instances, this can also extend to your salary, financial assets such as stocks and bonds, your deposit accounts, and even IRA accounts.
YouTube Headline:If you file for bankruptcy, for example, a creditor can seek a court order to have your stocks garnished if they are held in a non-retirement account.
YouTube Headline:Most people tend to assume that since they don’t own the house that they live in or any tangible assets like cars or money in the bank, then a creditor can’t seize anything from them.
YouTube Headline:This, however, is a very fatalistic assumption since a creditor who is determined to recoup what they are owed can stake a claim on virtually anything that you own.
YouTube Headline:Nevertheless, there are certain exemptions that can protect you from losing some of your assets in the event that a court gives a forfeiture judgment.
YouTube Headline:This, of course, varies from state to state.
YouTube Headline:In most jurisdictions, a creditor is allowed to make a claim on your home, which means you can lose your house if you are unable to pay back secured debts.
YouTube Headline:In the case of unsecured debts such as credit card debts and payday loans, however, your creditor cannot make any claim on your assets.
YouTube Headline:If you live in a rented property or a house that is owned by someone else, judgment creditors are also not allowed to claim it since you don’t have the right to give it away or sell it.
YouTube Headline:If you give away a property that you own in order to protect it from forfeiture, your creditor may be able to sue you for attempted fraud.
YouTube Headline:This may result in your property being repossessed and given to your creditor.
YouTube Headline:Furthermore, you can be fined or prosecuted in a court of law for deliberately attempting to defraud your creditor.
YouTube Headline:We will discuss this avenue later in the book among the more aggressive debt management strategies
YouTube Headline:230 00:23:29,520 --> 00:23:41,480 A creditor who has a judgment against you can also go after property that you are entitled to but haven’t possessed yet, especially once your right to the property has been firmly established.
YouTube Headline:This may include salaries and commissions that you earned prior to or after the judgment has been made, severance pays, refunds, insurance payouts, royalties, and inheritance.
YouTube Headline:One of the ways in which you can protect yourself from this process is to make sure that all your assets are owned by your partner, spouse, or other parties.
YouTube Headline:A creditor doesn’t always have to forfeit your property after a judgment has been made.
YouTube Headline:Sometimes, they may opt to attach a judgment lien on a property that you own, usually real estate (building and land).
YouTube Headline:A lien is essentially a notice which stipulates that you owe a certain debt.
YouTube Headline:This is normally filed with the register of deeds in the jurisdiction where the property is located.
YouTube Headline:A judgment lien gives a creditor the right to collect their debt from the money that is made from the sale of the property.
YouTube Headline:In most states, judgment liens usually have a validity period of 5 years and creditors are allowed to renew them until the judgment expires.
YouTube Headline:However, there are a number of exceptional circumstances under which a creditor cannot seek a judgment lien.
YouTube Headline:These include bankruptcy and foreclosure.
YouTube Headline:Furthermore, a creditor cannot attach a lien on your property if there is one already in place.
YouTube Headline:Foreclosures
YouTube Headline:244 00:25:05,720 --> 00:25:15,400 A foreclosure is a process through which a mortgage investor or lender repossesses a house when an individual fails to make their mortgage payments.
YouTube Headline:Foreclosures are often triggered by a change in an individual’s financial position, which makes them unable to meet their mortgage obligations.
YouTube Headline:Some of the most common causes of foreclosures include medical problems that make one unable to work, too much debt, and sudden unemployment.
YouTube Headline:How Foreclosures Work
YouTube Headline:249 00:25:36,000 --> 00:25:41,640 There are two types of foreclosures; judicial and non-judicial foreclosures.
YouTube Headline:In a judicial foreclosure, a lender typically brings a legal action against a debtor to court.
YouTube Headline:This usually takes longer since each step of the process takes a period of between 30 to 90 days.
YouTube Headline:On the other hand, non-judicial foreclosures take less time and do not require court action.
YouTube Headline:They are instead based on the “power of sale” close that a lender has signed with their borrower.
YouTube Headline:Regardless of the type of foreclosure, your lender will serve you with a written notice to clear your outstanding debt followed by a “Notice of Default” (if you fail to make the payment) and a “Notice of Sale”.
YouTube Headline:If you feel that the foreclosure is unfair or you need more time to clear the payment, you can contest a foreclosure in a court.
YouTube Headline:If you are facing a judicial foreclosure, a court will typically serve you with summons so you can make your case and challenge the foreclosure.
YouTube Headline:However, if you are dealing with a non-judicial foreclosure, you will need to take legal action against your lender to stop the process of foreclosure.
YouTube Headline:In some states, the law requires a lender to provide their debtor with the option of reinstating the loan in order to halt the process.
YouTube Headline:This allows you to continue living on the property after the Notice of Sale until the ‘sale date’ provided you settle the payments that you have defaulted on.
YouTube Headline:You can also be granted the opportunity to clear the entire loan, although this is only possible if you can secure a substantial amount of money or refinance the home.
YouTube Headline:If you are unable to stop the foreclosure, the property will be put on auction by a court so that interested individuals can bid for its purchase.
YouTube Headline:However, if no buyer is found, ownership of the house will be automatically transferred to the lender.
YouTube Headline:If you have not made plans to protect the house and are still living in it, you face eviction and should start looking for alternative accommodation.
YouTube Headline:In most states, the law offers you a certain period within which you can reclaim your house after a foreclosure.
YouTube Headline:This redemption period is usually indicated in the ‘Notice of Sale’.
YouTube Headline:However, you will have to be willing to clear the loan payment in addition to the costs incurred by the lender during the process of foreclosure before you can reclaim your home.
YouTube Headline:Consequences of Foreclosure
YouTube Headline:269 00:28:05,320 --> 00:28:11,320 Going through a foreclosure can pose serious challenges to you as a debtor.
YouTube Headline:The most obvious outcome of a foreclosure is that you may end up losing your house and getting evicted.
YouTube Headline:This means you will be forced to look for accommodation elsewhere (renting a house), which will inevitably take a toll on your personal and financial life.
YouTube Headline:Foreclosures are also generally very expensive processes that can make you lose a lot of money.
YouTube Headline:When you default on your loan payments, your lender may charge you exorbitant late fees.
YouTube Headline:In addition to this, you might end up incurring a lot of legal fees as you try to fight the foreclosure.
YouTube Headline:Any extra fees that a lender imposes on you ultimately increase the amount that you owe them, and you may find yourself still indebted to them even after your house has been foreclosed and sold if the proceeds of the sale are not enough to cover all your debt.
YouTube Headline:Similarly, a foreclosure can severely impact your credit score.
YouTube Headline:Once a lender initiates a foreclosure, your credit score will reflect this a month or two after the proceedings have begun and will remain that way for up to 7 years.
YouTube Headline:This can seriously hamper your ability to secure another mortgage loan, even though you may still be eligible for some government loans.
YouTube Headline:In some cases, a foreclosure can also hurt your chances of securing employment.
YouTube Headline:Filing a bankruptcy claim may temporarily stop a foreclosure from proceeding.
YouTube Headline:However, the process is often very complex and may vary from state to state.
YouTube Headline:It is therefore important to seek advice from a qualified attorney on the best course of action.
YouTube Headline:In conclusion, here are some of the key takeaways to remember from this chapter:
YouTube Headline:285 00:29:54,240 --> 00:30:03,760 * Always respond to lawsuits and summonses because if you don’t they likely get a default judgment against you.
YouTube Headline:* Lenders can resort to wage garnishments and seizing money from your bank account as a means of recovering the money that you owe them
YouTube Headline:288 00:30:12,800 --> 00:30:20,160 * Failing to clear your mortgage loans can put you at risk of losing your house and getting evicted
YouTube Headline:290 00:30:20,160 --> 00:30:33,640 * There are several steps that you can take to stop foreclosures and garnishments including negotiating with your creditors, filing a bankruptcy claim, and debt consolidation/ refinancing.
YouTube Headline:* In the next chapter, we will look at a range of strategies that you can deploy to frustrate or halt debt collection activity.
YouTube Headline:Alright folks, we've covered some important insights from Tom Cromwell's book "Crush Debt Now!"
YouTube Headline:which is an essential guide for anyone looking to take control of their finances and say goodbye to debt.
YouTube Headline:One key takeaway: don't ignore legal proceedings like lawsuits; play it smart and respond promptly to avoid unnecessary consequences.
YouTube Headline:Lenders have tools at their disposal, such as garnishing wages or emptying your bank account, so it's crucial to stay on top of things and keep an open line of communication with your creditors.
YouTube Headline:For those with mortgage loans, remember that your home is at risk if you don't stay current on your payments.
YouTube Headline:Don't let debt take away the roof over your head; there are ways out!
YouTube Headline:Negotiate, consider bankruptcy as a last resort, or explore consolidation and refinancing options to get back on track.
YouTube Headline:Remember, financial freedom is within reach, and with the right strategies, you can achieve it faster than you think.
YouTube Headline:So keep pushing forward and never give up on your dreams of a debt-free life!
YouTube Headline:As the legendary Dave Ramsey once said, "Live like no one else now so you can live like no one else later."
YouTube Headline:Keep that mindset and crush those debt goals!
