The following true story appeared in the 13wham.com website out of Rochester New York. Drowning In Debt. It is a short article but wll worth reading. Here is a summary of what it says. A woman got carried away using credit cards for small purchases. Everything was going along fine until one day she realized she was trapped by having accumulated over 50,000 dollars of unsecured credit card debt. Clearly, like so many americans she was not paying attention.
She readily admits in the article that she was not paying attention. As long as she was making minimum payments the banks just continued to let her pile on. Then, of course, according to plan, started the squeeze. Higher interest rates, all legal , and written into the agreement that no one reads. So, like many americans in this situation, she sought help from a non-profit organization, also known as a consumer credit counseling company. (The supposed Holy Grail of debt relief). I was once a Regional Manager of a non-profit. You should know that these programs are controlled by the banks.
Her credit counselor reviewed her income and expenses, only to determine that she was not a candidate for a debt management or consumer credit counseling program because she could not afford the minimum monthly payments. They could not offer her any other alternative relief program because non-profits are totally limited in the help they can offer. Would learning to budget help her in this scenerio?, Absolutely not. So, she was forced to declare bankruptcy. The problem was, that she owned half the house she lived in and it had equity. So, in the bankruptcy, the courts put a lien on her half of the house, and, took most of the things she purchased with the credit cards to improve her home, so they could be sold, and the money used to help pay off creditors and lets not forget the trustee appointed by the courts to oversee the bankruptcy.
This story is a crime. People are constantly being sold a bill of goods, because they are not told their are other debt relief options, aside from bankruptcy and consumer credit counseling through a non profit. She may well have been a candidate for a debt settlement program, which could have cut her payments buy about half. Is a debt settlement program a utopia? No, but was the bankruptcy a utopia? She may well have been able to keep the 50% equity in her home, and even the things she purchased running up the debt. By filing a bankruptcy, she was wiped out, and the creditors probably received less than they would have had she been a candidate for debt settlement, or even an alternative which may have been provided to her by a for-profit debt relief company.
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