As the economy is still continuing a downward spiral with no signs of bottoming out, foreclosures are getting a lot of media attention lately. It's interesting that no one reports on the continued large amount of credit card debt that Americans are carrying. Credit card debt accounts for many more bankruptcy filings than foreclosures. Many of the actual causes of foreclosure can be attributed to a large amount of credit card debt also. A lot of people who fall behind on their mortgage payments do so by trying to keep up on their card payments as well ending up in foreclosure. Having credit can be addictive and a bad habit that is hard to break. When people filing for bankruptcy are told that they will have to cut up their cards and not be allowed to keep any, they have a tough time understanding how they will live without credit.
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After speaking with debtors, filing bankruptcy becomes a very hard decision psychologically because the individuals feel guilty about not being able to pay the credit card companies back. In many cases, the credit card companies offered new credit to individuals they knew were already over extended. Don't forget about all the money they have collected over the years in fees and interest from these same individuals. Lenders use marketing tactics glorifying credit and promoting the irresponsible use of credit cards on unnecessary items. Prior to filing bankruptcy, many debtors will try to keep their credit cards by attempting to negotiate with the creditors to offer a lower interest rate or payments. Creditors have no reason to negotiate anything while the account is still being paid on. When a debtor is heading for a bankruptcy filing and the account is in default, all of a sudden they change their tune trying to get whatever they can from the debtor. In other words, as long as you can make the minimum payment they have no interest in helping you out, but after they've trashed your credit, they want to settle for pennies.
Many individuals forget the time leading up to filing bankruptcy when the creditor's collections department would not do anything for them except raise the fees and interests that ended up causing the debtor to default on that account. The bottom line is, when a debtor gets himself into financial trouble they shouldn't worry about what the creditor gets paid. They have been paid very well already. Financial trouble is not a walk in the park and can weigh heavily on individuals. This is the reason why bankruptcy was created. Congress created bankruptcy with the idea that good people deserve a second chance. Many Americans today are buried in credit card debt with no hope of getting out. Filing for bankruptcy might give these people a fighting chance to get back on their feet and start over. When filing bankruptcy it's always important to consult with a bankruptcy attorney and make sure it's the right decision for your financial future.
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