Debt Relief Without Bankruptcy

It’s a sad story that’s all too common for Americans of all classes and regions these days. Telephone harassment from debt collectors every hour on the hour. Mailboxes stuffed to the limits with threatening letters and past due notices. Bills arriving every week with credit card minimum payments that are impossible to satisfy – even with advances from other credit cards – and further credit or overdraft protection no longer offered from even the shadiest of lenders. At this point, there’s no way to dodge the question: debt problems are starting to overwhelm the household and have to be dealt with. In this age of paycheck to paycheck existence and universal credit availability, it is amazing that more people have not hit the bottom of debt burdens already. As a result of all of this, the numbers of borrowers filing for bankruptcy protection have skyrocketed in recent years.

This makes sense, of course, citizens have been told since birth that when they rack up bills they are unable to pay, bankruptcy would be the only possible alternative. Unfortunately, congressional changes to the United States Bankruptcy Code made at the behest of credit card companies have utterly ravaged Chapter 7 and Chapter 13 protection. It’s far harder for consumers to now qualify for bankruptcy and nearly impossible for those filing to live under their new (Internal Revenue Service derived) restrictions. As so often happens within capitalist societies, though, once a need arises for assistance after the government has fallen through on their promises, new options develop within the private sector.

In this case, the debt relief industry has quickly replaced bankruptcy as the thinking borrower’s most promising solution to mounting financial burdens. There’s debt consolidation, of course – which replaces many small debts and payments with one all-encompassing loans – but that generally requires a good portion of the borrower’s equity to be successful, and, in this time of falling home prices nationwide, that can be a dangerous option. Consumer Credit Counseling companies are certainly popular thanks to their relentless advertising campaigns, but, while they do tend to lower overall interest rates through a similar consolidation program, the Consumer Credit Counseling companies have deleterious effects upon borrowers’ credit reports similar to bankruptcy. drp Just as worrisome, many of these firms also take money from the credit card conglomerates, which has raised suspicions about their true motives.

A successful debt settlement firm, however, will boast relatively few consequences upon their clients’ credit ratings or FICO scores, the firms maintain an adversarial relationship with the credit card companies, and home equity never comes into play. Each year, tens of thousands of new customers find themselves helped in ways they had never imagined possible. Debt settlement relief is also known as debt negotiation. Reasonably enough, this is because the debt settlement specialists negotiate with representatives of credit card companies on behalf of their debtor clients with hopes of reducing the total balance for all cards by as much as sixty percent. This may sound too good to be true, but debtors must keep in mind that bankruptcy protection, however dismal the current realities surrounding Chapter 7 may seem, does still exist to some degree. As borrowers should readily understand, the chance (however remote) that ALL debts may be ultimately removed upon whim of court trustees puts the fear of God to lending companies.

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