Credit Debt - Why Credit Card Companies Will Agree to Reduce Debt Up to 70%
Have you ever thought that with the credit debts on the increase the credit card companies must be losing lot of profits? Then why would they agree to debt elimination? These are very common concerns of people who think that filing bankruptcy is a better option than getting a reduction on their credit debt.
The fact is that the recent events have changed the face of the US economy in just two to three years.
People found themselves jobless and those who had invested their money to earn profits in stocks and real estate lost everything as the markets crashed to their ever recorded lowest.
The worst came when people in an attempt to escape payments started filing bankruptcies instead of paying.
Thousands of properties went under liquidity and repossession by the banks.
But this did not do much good to the banks as they needed cash instead of property.
With real estate losing prices the banks suffered major setbacks and were not able to recover their losses even from partial payments and liquidities.
Some banks couldn't take the blunt and collapsed in the process.
This raised an alarm and people started withdrawing their savings from the banks which further damaged their condition.
With all this going on behind the scene in a bank the government offered them some respite through a stimulus package to cover up for their losses.
Still the damage was not completely covered and the banks continue to survive under the threat of more bankruptcies.
The government offered relief programs for the public so that instead of filing bankruptcy people should try to pay back some part of their loans so that the banking operations should continue and banks instead of gathering liquidated properties should have some business running.
The reason why banks will agree to reduce credit debts is that the major part of the unpaid bills is the interests on the credit cards and not the actual amount spent.
Besides, getting something is far better than getting nothing in case of a bankruptcy filed under chapter 7 of bankruptcy code (No Asset case).
With the current recession the debtor has better chances of winning a case.
But to be honest no bank will be willing to deal with an individual who has filed insolvency in the past.
This might hinder any attempt to take a fresh start.
It is therefore better to go through with an elimination process than to attempt insolvency.
The fact is that the recent events have changed the face of the US economy in just two to three years.
People found themselves jobless and those who had invested their money to earn profits in stocks and real estate lost everything as the markets crashed to their ever recorded lowest.
The worst came when people in an attempt to escape payments started filing bankruptcies instead of paying.
Thousands of properties went under liquidity and repossession by the banks.
But this did not do much good to the banks as they needed cash instead of property.
With real estate losing prices the banks suffered major setbacks and were not able to recover their losses even from partial payments and liquidities.
Some banks couldn't take the blunt and collapsed in the process.
This raised an alarm and people started withdrawing their savings from the banks which further damaged their condition.
With all this going on behind the scene in a bank the government offered them some respite through a stimulus package to cover up for their losses.
Still the damage was not completely covered and the banks continue to survive under the threat of more bankruptcies.
The government offered relief programs for the public so that instead of filing bankruptcy people should try to pay back some part of their loans so that the banking operations should continue and banks instead of gathering liquidated properties should have some business running.
The reason why banks will agree to reduce credit debts is that the major part of the unpaid bills is the interests on the credit cards and not the actual amount spent.
Besides, getting something is far better than getting nothing in case of a bankruptcy filed under chapter 7 of bankruptcy code (No Asset case).
With the current recession the debtor has better chances of winning a case.
But to be honest no bank will be willing to deal with an individual who has filed insolvency in the past.
This might hinder any attempt to take a fresh start.
It is therefore better to go through with an elimination process than to attempt insolvency.
