Bankruptcy Information
Chapter 7 bankruptcy and Chapter 13 bankruptcy offer different forms of protection. If you’re facing a financial crisis, a local bankruptcy attorney can help you determine whether Chapter 7 bankruptcy or Chapter 13 bankruptcy might be the right answer for you.
Generally speaking, Chapter 7 bankruptcy is intended to wipe the slate clean by discharging unsecured debt—debts like credit card debt, medical bills, and unsecured loans. Chapter 13 bankruptcy, on the other hand, is intended to give a debtor time to catch up past due payments over a period of 3-5 years, while keeping secured property like houses and cars.
Just complete this form & let Bankruptcy.me connect you with a bankruptcy attorney near you.Payday Loans Prove Reliable in an Economy that Isn’t
The best thing about payday loans is that they are reliable. In a post recession period, a lot of people are finding that the credit industry isn’t what it was before. In the past year, consumers rethought their former decision of using credit to make most of their purchases. Due to the recession, Americans cut back drastically on discretionary spending. That’s bad news for credit card companies whose business is predicated on consumer spending.
Fitch Ratings recently reported that income of U.S. credit card companies will “continue suffering because of the lousy labor market, bankruptcies and bad loans.” They also cite that the unemployment rate over 10% is expected to last for most of 2010. “As a result [of the unemployment rate], the losses of credit card issuers could worsen further,” they stated.
The Consumer’s Relationship with Credit
Consumers have had a good relationship with credit card companies over the past few decades. Though it was ideally to benefit card companies, consumers were able to make purchases they couldn’t have made without it. Credit card companies became lax, though. According to Justin May, an economic analyst for Fitch, “Lending companies were like fat and happy old men thinking their feast would last forever… What they didn’t realize was that nothing lasts forever. Even their bread and butter.”
From 2006 to 2007, credit companies were handing out credit left and right. They did little to study an applicant’s history or present financial situation, much less their ability to repay the debt. After so much credit was extended, and little return was realized, credit card companies found that they were in dire straits. Companies had little recourse when the recession peaked because a lot of people simply couldn’t afford to pay their debts. Many people fell into foreclosure, bankruptcy or just ignored their financial commitments. All three were bad news for credit card companies who at one time had a strong tie to the consumer market. All of a sudden, consumers that needed some quick cash on credit, were looking at payday loans, or friends and family and other means of finding funding. Consumers in need weren’t seeing credit companies as the only viable option anymore.
What the Recession Has Taught Us
Now that the recession is officially deemed “over,” there are some lasting concerns. Credit card companies are still reeling and writing off huge debts. Estimates are that there is roughly $ 3.5 billion in debt that companies won’t likely ever see. Consumers are still struggling to find funds. The market might have stabilized to some degree, but many purse strings remain tight as a drum. People aren’t clamoring to use what little credit they have, and credit companies aren’t extending any. Most people have tarnished credit reports now and don’t qualify under lenders strict policies. May continued, “Credit card companies don’t want to risk any more than they have to and aren’t extending credit to those who need it. Though that is what they have been accused of doing for years, if they don’t extend credit soon, they won’t have a business.”
In the end, it will be up to the consumer to get the market rolling at full-steam once again. Though payday loans and family lending have sustained them thus far and proven to be more reliable options than credit card companies, hopefully they will change their ways. Lending companies are hoping people will start using credit to spur the credit industry on, once again.
