{"id":286933,"date":"2016-04-04T10:41:53","date_gmt":"2016-04-04T15:41:53","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/debt-relief\/dealing-with-creditors-informally.html"},"modified":"2025-08-07T08:24:19","modified_gmt":"2025-08-07T13:24:19","slug":"dealing-with-creditors-informally","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/debt-relief\/dealing-with-creditors-informally.html","title":{"rendered":"Loan Workouts and Dealing with Creditors Informally"},"content":{"rendered":"\n
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Creditor Actions and Debt Relief Options<\/h1>\n\n
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\n By Amy Vandervort-Clark, J.D.<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Struggling with financial difficulties is stressful. When your financial problems impact your ability to pay your bills, you may end up facing\u00a0calls and letters from creditors demanding payment. Some debt collectors can be very aggressive, but you may have a number of repayment options available.<\/p>\n\n <\/div>\n\n\n\n

If you’re struggling with debt, you’re not alone. According to the Federal Reserve,\u00a0American household debt hit a record $16.9 trillion at the end of 2022<\/a>, up $2.75 trillion since 2019. Creditors may take several actions if you can’t pay. There are things you can do to help relieve and resolve your delinquencies with your creditors or lenders.<\/p>\n

Type of Creditor<\/h2>\n

When addressing debt, your first step should be to\u00a0identify the type of creditor for each unpaid\u00a0bill or loan. Aside from utilities, your creditors will fall into two categories: Secured creditors\u00a0and unsecured creditors.<\/p>\n

Secured creditors<\/a>\u00a0issue\u00a0loans or credit backed by collateral or an interest in property. Collateral is a tangible item that the lender can repossess if you fail to pay your loan. Examples include an auto loan or mortgage on a house. If you fail to pay these debts as arranged, the lender can take back your car or\u00a0foreclose on your home<\/a>.<\/p>\n

Unsecured debt or creditors has no security interest in your property. Examples include credit cards, personal loans, and medical debt.<\/p>\n

Creditor Actions<\/h2>\n

If your efforts to\u00a0become debt-free<\/a>\u00a0are not fast enough for creditors, they may not be as patient as you’d hope.\u00a0Creditors can take several actions to recover their money if your cash flow is tight and you fall behind in making payments.<\/p>\n

Wage Garnishment<\/h3>\n

In most situations, a creditor has to take you to court and get a judgment against you before being permitted to\u00a0garnish\u00a0up to 25% of your wages<\/a>. If that happens, you can contest it\u00a0arguing that you cannot survive on the remaining funds.<\/p>\n

There are three situations in which wage garnishment can proceed without a court proceeding:<\/p>\n