With unemployment widening across the country, household foreclosures at all term highs, and credit card usage peaking early history, bankruptcy appears to be a ray of sunlight for the individuals and families experiencing the pressures of our enthusiastic commonwealth's frugality. Before considering this as your "golden list", calculate me to shed several lights on the consequences of filing insolvency.
With unemployment spreading across the country, household foreclosures at all time highs, and credit card usage peaking previous history, bankruptcy appears to be a ray of sunshine for the individuals and families experiencing the pressures of our great nation's economy. Before considering this as your "golden ticket", allow me to shed some light on the consequences of filing bankruptcy.
Unfortunately, when considering bankruptcy, a common disbelief made by people is that it will be a fresh start for the individual. Actually, the process itself has become more time consuming, and the negatives outweigh the benefits. The first negative is common knowledge; the ten year blemish permanently staining the consumers credit bureau. What is less known is that that same record remains recorded throughout the courts public records for 20 years, causing difficulty in not only financing but also being hired by prospective employers. Additionally, this attracts high interest credit card companies and lending institutions to target these persons and further cause future difficulty, as if these kind folk haven't been through enough.
Currently, with more and more new bankruptcy laws going into effect, just to file bankruptcy the client is enrolled into a "ticket-in" program. This is in essence a credit counseling session mandated by the courts through an agency approved by the U.S. Trustees Office. After finishing this program a completion certificate must be submitted. By the way, who do you think pays for this course? (Hint: not the government) Next, a "means" test must be done in order to qualify the candidate for filing, so if this person intended to file a Chapter 7 it is likely they will be rolled into a Chapter 13. Finally, a "Ticket Out" program must be completed, which is similar to a financial management course. These are merely the new hoops to go through for filing. I won't even touch on the incredibly outrageous lawyers fees that must be paid, and again, not by the government.
Another aspect to consider are one's assets. The courts can actually come to the filer's house and repossess property it deems unnecessary to auction off as partial repayment to the creditors, if forced to file a Chapter 13. So the HBO package goes, as well as many other "luxuries". Furthermore, failure to make payments on time, uncompleted ticket in/out programs or bad representation can cause the bankruptcy to be dismissed. When this happens the bankruptcy remains on the person's credit report and has reaped absolutely no benefit from the process.
My recommendation for anyone considering this avenue is to really seek out the most viable option for your personal situation. Consider selling unwanted or unneeded assets, working more hours or a second job, conduct a budget analysis, factoring in all incoming and outgoing payments and communicate with your creditors.
How Will Debt Settlement Affect My Credit Score?
The most frequent question that is asked is how are credit scores affected while enrolled in a debt management program. Let me first start off by stating that any and every debt relief or management program will negatively affect your score. In fact, anything short of paying off debt in a timely manner will negatively affect ones credit score. Now, that “disclaimer” is out of the way, let’s get to the facts.
What Options Do I Have to Get Rid of Debt?
Thoughts of a looming depression are causing widespread panic for the average citizen, here in the U.S. and globally. While the President conducts secret meetings and aids big businesses (even those that have committed high end fraud), the risk of hundreds of thousands of jobs are on the line. The normal citizens have been (so far) left out of the equation but left to pay for the years of greedy Wall Street capitalization and the like.
Credit Card Companies Crackdown- What Does This Mean For You?
With all of the banks in a panic to reduce their losses to their mostly fraudulent practices, many of the larger lenders are putting into place more restrictions to yet again deter the hard working citizens from escape of the debt trap. Recent news coverage and yet more to come are announcing changes that will affect life as we know it- even for the responsible card holders and especially for the predatory lending practices for high interest consumers today. So be on the lookout and be very wary of up and coming changes to your credit, may it be bad or good.
