Now that the traditional Chapter 7 bankruptcy protection has become so much more difficult for working Americans to enter into because of the past few years’ legislative changes, heads of household interested in finally paying down their credit card debt have had to investigate the details supporting alternative programs of debt relief.
Bankruptcy: In direct opposition to the old fashioned Chapter 7 debt elimination bankruptcy that helped tens of thousands of Americans survive hard times and slough off impossible debts to start life anew, the Chapter 13 programs just pack together all of the various loan obligations for barely any true reduction of credit balances. All in all, a dispiriting percentage of the consumers forced into the Chapter 13 bankruptcy program as a last ditch effort to avoid foreclosure – the only truly understandable for allowing the overworked governmental clerks to enforce restrictive family budgets based upon Internal Revenue Service estimates of regional expenses – fail to meet the monthly requirements and wind up in a far worse position.
Still, the Chapter 7 program remains a much needed resource for those Americans that could slide under the stringent income qualifications while still affording the hundreds of dollars for administrative fees and registration costs plus whatever the newly demanded personal finance coursework shall charge the men and women filing for assistance. Even if the trustee appointed by the judicial system of the bankruptcy filer’s state of residence agrees to offer the Chapter 7 protection, officers of the government shall have carte blanche to sweep through the list of household assets to pluck most anything for resale.
Consumer Credit Counseling: Properly constructed, a Consumer Credit Counseling arrangement will not only be able to bring down monthly obligations to a more reasonable level but also permanently lower the Annual Percentage Rates on the collected credit card balances. Unfortunately, since they’re technically not working on just the behalf of the debtor – and, generally, though they don’t tend to advertise the fact, even asking the creditors for a separate fee for their services as go between – there’s a very real concern that the Consumer Credit Counseling negotiators could regularly win greater bargaining positions for the debtors.
Debt Relief Negotiation: Superficially, debt relief negotiation shares many of the same features of the Consumer Credit Counseling programs, but, once borrowers take the time to talk one on one with a certified professional trained in debt relief, the potential for substantial savings will become evident. Instead of vicariously throwing themselves upon the mercy of the credit card companies in vain hopes of avoiding the rigors of modern bankruptcy, borrowers who enlist debt relief counselors expect the intermediaries to utilize the Chapter 7 alternative as a viable threat.
Faced with the chance that a delinquent account holder would cash in all chips and successfully demand consumer protection from the government, most lenders unhappily agree to cut forty, fifty, even as much as sixty five percent from the current loan balances. In return, the debt relief clients have to simply refrain from attempting Chapter 7 protection – which they’d be unlikely to qualify for, in any case, given current statutes – and fully satisfy whatever portion of the credit accounts remained in a short period of time. A rarity in twenty first century finance, both the lenders and the debtors can formally separate financial ties after a payment schedule generally lasting only five years and each side should feel pleased with the outcome.
Addtional Resources
