Since the economy turned south in 2008, many Americans have faced severe financial woes. Many of these once hard-working people are now unemployed or have to be content with lesser forms of work other than what they were trained to do. The construction industry stalled rapidly in 2008 and unless the companies they work for get federal funding, these people are out of work. It seems that the only people who make a decent living are those who are employed by the government. Watching the news and seeing what’s going on in Wisconsin makes you see how untouchable the government’s unions are. Raising taxes on businesses and employers sounds like it will generate extra money to feed the machine, but in the long run more people will be unemployed and businesses will end up bankrupt. Looking for a way out of debt many Americans have been looking for loan modifications to avoid foreclosures, debt settlement and debt consolidation to get rid of credit card debt. Interestingly, there wasn’t much fuss about filing for bankruptcy. It seems that the credit industry has done their homework to ensure all bankruptcy alternatives are front and center. They even put in there about how the alternative would not hurt one’s credit. When figuring out who to trust, my parents always taught me to see what a person should gain. If a particular industry or person benefits from what they share with you, in most cases, that information will tend to benefit themselves.
Usually, most people hear the phrase use debt settlement to avoid filing for bankruptcy. When in fact, I believe people should file for bankruptcy and avoid settling debts. First of all, back to the loan modification to avoid foreclosure comments, it seems that the loan modification did not work. Only about 5% of those who apply actually graduate. Many people sign up for these programs and end up burying themselves in a new, lower payment for six months to a year, hoping they get approved. The bomb was dropped on them when the bank said they were ineligible and if they wanted to keep their house from foreclosure, they had to pay all outstanding payments. People in this financial situation have no way of paying back payments and end up forfeiting their homes when they should otherwise be filing for Chapter 13 bankruptcy.
Debt settlement is another topic that has garnered a lot of attention over the past few years. Debt settlement companies usually collect payments from individuals to collect enough money and offer settlements to creditors. Most debt settlement companies promise individuals that their credit will not be destroyed like a bankruptcy filing. The problem is, when people sign up with one of these companies, they are told to stop paying their payments. It doesn’t take a rocket scientist to figure out what will happen to these people’s credit when they don’t pay their bills. Basically, the results will be very similar to a person filing for bankruptcy. The debt settlement industry is unregulated, therefore, making it a great place for fraudsters and corrupt businessmen. It’s not saying that all of them exist, but there are a lot of them out there.
My favorite for getting rid of massive debt is filing for personal bankruptcy. Personal bankruptcy comes in two basic chapters, Chapter 7 and Chapter 13 bankruptcy. Filing for Chapter 7 bankruptcy is best for individuals who wish to clear a significant amount of unsecured debt. On the other hand, Chapter 13 bankruptcy shows its power in protecting one’s property. Both forms of personal bankruptcy share the power of automatic residence which takes effect once a bankruptcy application is filed in court. An automatic hold stops foreclosures, lawsuits, judgments, withholding of wages and all creditor attempts to collect. Filing for bankruptcy is the only form of debt relief that uses the force of law of the US Bankruptcy Court. When creditors decide to push the line, individuals need only call their bankruptcy attorney to make sure they are back in line. The main goal of personal bankruptcy is to get the individual back on a debt-free path.
