Repairing Credit Without Bankruptcy

As the number of Americans suffering increased debt loads rises exponentially during these dark economic times, more and more of our citizens have been forced to consider the debt relief alternatives available to them. Consumer debt (particularly the increase across the board in credit card debts) is a very real national crisis. Your authors understand this and urge every borrower concerned about their spiraling debt balances to take the steps required to handle what can quickly become a very serious problem. By attacking the credit card debt problems at their source, it is almost never too late to turn things around by the means at hand. However, too many borrowers simply give up at the first sign of trouble and hand over their various financial difficulties to be managed by a high priced ‘supposed’ authority. Whether through a Consumer Credit Counseling company or firm of attorneys specializing in bankruptcy law, there is an obvious temptation to help out one’s household by availing oneself of debt professionals, but there are debt strategies that do not need external assistance.

However, despite what news coverage (propped up by the journalists’ minimal recognition of the problems involved) may imply or the constant barrage of those promises that media advertisements out and out proclaim, there are very real negative consequences to most of these programs. Chapter 7 (the debt elimination process most Americans are familiar with) bankruptcy protection will ruin credit ratings for up to a decade and prevent borrowers from employment opportunities, security clearances, and even personal relationships should they be asked if they have ever declared bankruptcy. Furthermore, a stint of changes in the bankruptcy code a few years past spurred on by mercenary Political Action Committees that were funded by the multinational conglomerates that control credit card accounts (and decisively helped along by the sotto voce assistance of the Internal Revenue Service) have fundamentally altered just what bankruptcy means. Now, all but the most indigent and eternally unemployed are denied Chapter 7 protection. Instead, most borrowers are directed toward the Chapter 13 debt restructuring program which barely cuts the debts affected in any way and at the same time imposes harsh repayment plans designed by court appointed trustees with help from, once again, Internal Revenue Service guidelines.

Of course, those recurring television commercials for local bankruptcy law firms don’t tend to mention the damage bankruptcy will do to credit reports nor the lingering repercussions of the 2005 congressional legislation. You’ve seen these advertisements, we presume. They feature any number of actors pretending to be wise, trustworthy, grey templed bankruptcy attorneys who repeat the inevitable offers to guide their clients through the labyrinth of debt management (surely too difficult and convoluted for consumers to possibly figure out by themselves) by helping the borrowers to declare Chapter 7. They may even promise free consultations – though, as the need for the bankruptcy lawyer services continues to rise, that is less and less likely – while evading the mention of exactly how much these services will eventually cost. Even leaving aside the prices demanded by the attorneys and their firms (which can now reach four figures depending, as you would think, on the specific case and how much individual work will need to be done), just filing for bankruptcy will take a few hundred dollars and untold hours spent from those borrowers who can least afford them. It is not merely the amount of time each filer has to spend making sure that the massive amounts of paperwork are correctly documented with obsessive accuracy. Each borrower must remember that even the slightest mistake – forgetting to record a nephew’s car for which you had co-signed as an asset, say, or not knowing that your wife maintained a tiny holding in a family farm – could be considered fraud and leave the filer liable for criminal charges.

No, above and beyond such financial obligations necessitated by bankruptcy declaration and the man (or, like as not, woman) hours the filer must suddenly dedicate to the proceedings regardless of their family needs or job schedules – for borrowers that have found the need to take out a second or even third job this would be a particularly disastrous turn of events – there has been yet another change to the United States bankruptcy code presenting a uniquely irritating time waster. That’s right, even for those consumers declaring Chapter 7 who actually manage to successfully sneak in to the program, they must now take a course on debt management before their filing papers will be formally accepted and, as further insult, before their bankruptcy discharge will be formally announced. As you would expect, these classes – utterly without merit, by all accounts; something like learning annex tutorials on ethics taught by disinterested instructors likely trailing their own credit card debt burdens – have no actual point beyond forcing needy borrowers to abandon their hopes of debt elimination. The costs of these courses are to be paid strictly on the borrowers’ own tab (with, naturally, no chance of credit to be offered to them), and, since only a handful of ‘schools’ around each area are granted proper certification from the federal government, the courses hardly have incentive to bow to market pressure for reasonable costs. Many borrowers simply can not afford to attempt bankruptcy if for no other reason than they haven’t the money available. Sounds thoroughly backwards (if not genuinely corrupt), but this is the nature of bankruptcy protection in today’s world.