As consumers across the United States struggle through the deteriorating economic crisis and rue the day they ever took out so much unsecured debt for so little reason, many of our heads of household have come to the difficult realization that their family’s stability (or out and out survival) requires them to employ one of the greatest hallmarks of the American experiment: bankruptcy protection. Unfortunately, as many of our countrymen recognize to their lasting financial detriment only after filing for bankruptcy protection, the transformation of Chapter 7 and Chapter 13 personal bankruptcy protection over recent years has removed many of the former guarantees previous generations simply took for granted. Chapter 7 debt elimination bankruptcy protection – the most attractive and sought after form which officially liquidates credit card bills and medical loans – is now the sole reserve of borrowers who’ve made less than the median income for their state, and all others would have to consider the Chapter 13 program.
The decision on whether or not borrowers may still want to look into Chapter 13 bankruptcy protection has become even murkier. For the all the good that bankruptcy protection could do through reshuffling the terms of mortgage loans so that home owners would not risk losing their primary residence, the payment schedules set down by the trustee (the heart of Chapter 13 bankruptcy protection) can be so onerous that most borrowers inevitably leave the program after investing a good deal of money and ruining their credit scores for nearly a decade following the onset of bankruptcy protection as registered by the county clerk. Considering that Chapter 13 bankruptcy protection commits families to sweat out a living on a governmentally assessed allowance for years afterward – during which the filers shall have to repay the lion’s share of their credit accounts anyway for the supposed privilege of bankruptcy protection – Chapter 13 programs are often more trouble than they’re worth.
Indeed, many of the borrowers who are even vaguely thinking over the costs and benefits of bankruptcy protection might end up better off by taking a look at the alternatives to Chapter 7 or Chapter 13 protection. Debt settlement negotiation, though most consumers remain estranged from the innovative approach, involves the mere notion of Chapter 7 bankruptcy protection to convince creditors to ease up on their clients’ unsecured debts with reductions often reaching sixty percent cuts (or, for the borrowers, gains) from the original accounts. As with bankruptcy protection, the settlement negotiation alternative also forces borrowers to submit their household budget to official oversight in order to speed the repayment of left over credit card bills, but, in stark contrast to Chapter 13 bankruptcy filings, debt settlement officials take into account their prospective clients’ genuine expenses rather than estimations cooked up by the IRS as the United States Bankruptcy Code now insists upon.
In other words, as opposed to bankruptcy protection, debt settlement actively ensures that the borrowers who take advantage of the negotiation alternative repay what remains from their initial credit card balances at a relatively heightened pace. However, through successful settlement counseling, borrowers won’t have to concern themselves with tolerating the unnecessarily brutal budgets and family upheaval that’s become the calling card of Chapter 13 bankruptcy protection. Think of debt settlement negotiation as protection against bankruptcy protection (bankruptcy protection as currently instituted, that is), and be glad that Chapter 7 and Chapter 13 bankruptcy protection programs still possess enough lingering menace that lenders shall trade away the rights to legally held loans otherwise impossible to repay upon bankruptcy protection’s reputation alone.
In general, it is best to
avoid bankruptcy.
