How New Bankruptcy Laws Make Debt Settlement More Favorable Than Filing Bankruptcy

It is our primary duty to pay back our due loan amount

, regularly every month. But the present state of economy is not helping us in doing so. We are sinking deeper in debt and as a result unable to pay our dues on time. The increase in number of defaulters is causing a set back to the financial state of money lending organizations as well. The deficit in liquidity faced by them is having them run in losses too.

Lot of debtors who have home loans, education loans, cut in salary to compensate for, end up increasing their debt amount by taking more loans to repay past debt. This has resulted in a vicious circle of financial crunches which seem to never end. The effect of such a state leads to bankruptcy which is commonly sought after as a refuge to get debt relief. When the water starts to flow over your head, then as a last resort people file for bankruptcy. But the unfortunate thing is that it may not be a very clever choice. This is because bankruptcy has an adverse effect for a long period. One cannot buy a house, get life insurance or receive loans for over a period of 10 years.

On the other hand, collapse of so many industries due to bankruptcy would in turn mean disintegration of country's economy too. Thankfully the government has come up with new Bankruptcy Laws presented in the form of debt bail out program. To save the economy from crumpling any further, under this bail out program, the federal government gives generous financial help to money lending institutions.

This surplus money presented to the credit card companies saves these companies from immediate damage. The credit card companies in turn have been able to provide to debtors with relief from their debts by settling for a reduced amount of debt in the form of recovery. It has also been possible to get waiver offs from prior penalties levied on debtors. There have also been instances where new loans with lessened interest rates offered against those debt which bore heavy interest rates due to repeated default in accounts.

So, filing for bankruptcy may not always be the best option to get relief from debt, especially with the introduction of new bankruptcy laws by Obama's government.

How New Bankruptcy Laws Make Debt Settlement More Favorable Than Filing Bankruptcy

By: Christopher Boris

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