Ever since the economy turned south back in 2008, many Americans are facing severe financial woes. Many of these usually hard-working folks are now unemployed or have had to settle for a lower form of employment other than what they were trained to do. The construction industry came to a quick screeching halt back in 2008 and unless the company they work for is getting federal funds, these people are not working. It seems the only people making a decent living are those that are employed by the government. Watching the news and seeing what’s going on in Wisconsin makes you see how out of touch the government employment unions are. Raising taxes on businesses and employers sounds like it will make some extra money to feed the machine, but in the long run more people will be unemployed and businesses will end up in bankruptcy. Looking for ways out of debt many Americans have been looking into loan modifications to avoid foreclosure, debt settlement and debt consolidation to eliminate credit card debt. What’s interesting is, there isn’t much hoopla about filing bankruptcy. It seems the credit industry has done their homework making sure all the alternatives to bankruptcy are front and center. They even throw in there of how the alternatives will not hurt one’s credit. When figuring out whom to believe, my parents always taught me to look at what someone has to gain. If a certain industry or person is benefiting from what they’re sharing with you, in most cases, the information will be slanted to benefit themselves.
Usually, most people hear the phrase use debt settlement to avoid filing bankruptcy. When in actuality, I believe that people should file for bankruptcy and avoid debt settlement. First of all, going back to loan modification to avoid foreclosure comment, it seems that loan modification just doesn’t work. Only about 5% of those applied for actually go through. Many people sign up for these programs and end up burying themselves paying the new lower payment for six months to one year, hoping they get approval. The bomb gets dropped on them when the bank says they didn’t qualify and if they would like to keep their home from foreclosure, they will need to come up with all the arrears in payments. People in this financial situation have no way to come up with the back payments and end up losing their house foreclosure when they probably should have filed Chapter 13 bankruptcy.
Debt settlement is the other topic that has gathered a lot of steam over the last couple years. Debt settlement companies usually collect payments from individuals to build up enough money and offer a settlement to the creditors. Most of the debt settlement companies promise the individuals that their credit won’t be destroyed like a bankruptcy filing. The problem with this is, when people sign up with one 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 while they’re not paying their bills. Basically, the results will be very similar to that of a person filing bankruptcy. The debt settlement industry is unregulated, hence, making it a great place for scam artists and corrupt businessmen. It’s not saying that all of them are, but there are many out there.
My favorite to eliminate overwhelming debt is filing personal bankruptcy. Personal bankruptcy comes in two basic chapters, Chapter 7 and Chapter 13 bankruptcy. Filing Chapter 7 bankruptcy is best for an individual that wants to wipe out a large amount of unsecured debt. On the other hand, Chapter 13 bankruptcy shows its muscle in protecting one’s property. Both forms of personal bankruptcy share the power of the automatic stay that goes into effect once the bankruptcy petition is filed with the court. The automatic stay will stop foreclosure, lawsuits, judgments, wage garnishments and all collection efforts by the creditors. Filing bankruptcy is the only form of debt elimination that uses the legal power of the U.S. Bankruptcy Court. When creditors decide to press the limits, the individual only needs to call their bankruptcy attorney to make sure they get back in line. The main goal of personal bankruptcy is to put the individual back on the road to becoming debt-free.