Kamis, 07 Juni 2012

Why File Bankruptcy? When the Government Can Bail You Out

Over the last couple years there have been a lot of talk about the fiscal cliff, the debt ceiling, bank bailouts and how the economy continues to recover and now has turned the corner. If you were a bank, there is no need to File Bankruptcy. The government will bail you out and you will come back bigger and stronger than ever before. The problem is, middle America is nowhere close to being their own financial institution and are not on the receiving end of any government bailouts. Recently, the number of Americans filing for bankruptcy has declined and the media uses this for a platform to prove the economy has turned the corner. There is only one mistake with that theory, the US GDP for the last quarter was negative.1%. To me, this sounds like things are getting worse and not getting better. In 2012 alone, the United States trade deficit is expected to come in between $500 billion and $600 billion. Businesses are leaving the country by droves and if they don't leave they're filing bankruptcy and shutting the doors. We have now entered the twilight zone as close to one in every six Americans is now receiving food stamps. Consumer confidence is now at all time lows and recently hit the lowest it's been in over a year. The government keeps talking about all the jobs created, but the last week of January first-time unemployment claims rose to 368,000. Some economists are predicting this number will surpass 400,000 in the near future showing stress fractures in the economy. While people are still trying to avoid a bankruptcy filing at all costs, the federal government slapped a payroll tax hike on every working American costing the average worker $100 a month. Since the last election, companies are continuously announcing future layoffs making the American worker more pessimistic than ever. Recently, a Gallup poll showed 65% of all Americans believe 2013 will be a year of economic difficulty and 50% think that the best days of the United States are now in the past. Just because the media says it over and over again doesn't make it true. The debt ratios of American are continuing to rise as banks are continuing to lend to people but can't really afford it. In essence, they are creating a payday loan affect where people borrow on future income to pay bills in the past. At some point in time with all the interest in fees, the loan sharks will get everything and the people will have nothing left to survive on. The only option for these folks is to file bankruptcy to stop these creditors. When the big banks failed a few years ago, the government stepped in to help their friends out at our expense. Many of them are in trouble again and the government once again is allowing the Fed to fire up the printing presses to help their friends through quantitative easing. While most people don't understand the impact this monetary policy will have on Main Street. Just as the Weimar Republic and Zimbabwe, in a matter of time the US will start feeling the effects of quantitative easing from hyperinflation. The money gets so watered down, prices nationwide will go through the roof and the only option for struggling Americans will be to file bankruptcy. If wages don't follow suit, many people will lose their homes to foreclosure just so they can put food on their table. One thing is for sure is that people should not count on the government for anything.

Selasa, 05 Juni 2012

Unsustainable Debt Fueling Fake Prosperity That Leads to Filing Bankruptcy

Over the last 10 years we have seen a huge rise in consumer debt in the United States. After September 11 the US appeared to be heading back into a recession and the president said that for our nation to heal in this terrible time we need to spend money. Surely after that the government put pressure on the banks to lend recklessly on stated income. The old joke was if you could fog a mirror the mortgage broker could get you a loan. This drove the real estate market to record highs nationwide. People didn't only by their own dream home that they couldn't afford, they bought a vacation home and a few investment homes. Many people were flipping houses as the market was driven up on this debt fueled fake prosperity. In 2007, the derivatives market fractured and the entire economy and banking system almost collapsed. The government who was partly at blame for the entire situation happening pumped $1 trillion into the economy and said disaster averted. The problem was that the money went to the banks, insurance companies, and investment houses that fueled this collapse by their crazed derivatives trading. Who got hit the worst were the small businesses that didn't get any stimulus money and the individuals that lost their jobs and had to file bankruptcy. In the years to come, this unsustainable debt reared its head as most Americans could no longer afford to pay for a home that was worth half as much as they owed on it and hence they lost to foreclosure. Following the foreclosure to eliminate the liability caused by the legal process most of the same folks ended up filing bankruptcy also. The bankruptcy filing numbers continued to rise to a peak at the end of 2010 and in 2011 the US saw a decline making government officials clang the symbols stating the end of the recession is here. In 2012 the US saw another decline in the number of Americans filing for bankruptcy but there are many other numbers that are suspicious to claim that things are getting better. This last week the GDP number came out in the US had a.1% decline in GDP lower than the predicted 1.5 % increase. It's really no surprise to see our GDP declining as many manufacturing businesses have moved overseas or just close the doors because they could no longer compete with the Chinese. When NAFTA was created the US had a trade surplus of $1.6 billion a year with Mexico and at the end of 2010 we saw a Mexican trade deficit of $61.6 billion. When it comes to China there is a deficit of 4 to 1 of what we spend on their products compared to what they buy from us. Unemployment numbers are now creeping up again with a suspicious 7.9% currently. The optimistic American that is trying to hang on to their fake prosperity is only able to continue doing so by acquiring more debt. If people are wondering Why the number of Americans filing bankruptcy has declined since 2010, I don't believe it's because the economy is returning but more that banks are once again taking larger risks loaning to individuals that are already buried in debt. When the Fed introduced quantitative easing, they fired up the printing presses and started sending out money to the banks to start lending again. This creates a huge problem for the economy down the road because there is nothing backing this funny money. At the end of 2012, a study came out showing that middle-class Americans four years ago had an income to debt ratio of 50% and now the number has gone up 154%. Where these people are normally filing bankruptcy, they are now able to borrow more money and rob Peter to pay Paul. For the naysayers, just like in 2007, as these bubbles are being created it's just a matter of time before the whole thing comes crashing down. It didn't work for the Weimar Republic back in the 1920s and it won't work for the US in 2013. No one can put a date and time on how this thing will play out, but one thing we can all do is try to get back to debt free lifestyle and make sure our own financial house is in order even if it means filing bankruptcy.

Jumat, 23 Maret 2012

File Bankruptcy and Take Control of Your Debts

Expert Author Bob P Jones Millions of Americans file bankruptcy each year, so why is it that many people still see bankruptcy as a failure? Corporations file bankruptcy as a way to restructure and reorganize coming out of bankruptcy leaner and stronger. This is perfectly acceptable but personal bankruptcy still carries a negative stigma for many. In today's tough economy many people are in the situation where filing bankruptcy is a serious option to alleviate overwhelming debt. The thing to keep in mind is that if your unpayable debt is beginning to affect your life, your health, your family, as well as your credit rating, then filing bankruptcy just may be the wisest decision to regain control of your finances. Filing bankruptcy truly puts the control in the hands of the debtor, which can be a welcome change after being hounded by angry creditors making unreasonable demands or threats for money. This is because when a person decides to file bankruptcy, it sends a clear message to their creditors that they have made every attempt to pay back their debt but are unable to. It also tells the creditors that the individual is turning to the legal system for the protection that bankruptcy offers them. Filing bankruptcy has many advantages for an individual that has been struggling to keep their head above water. To begin with, once the bankruptcy petition is filed with the court, the automatic stay is put in place. The automatic stay legally prohibits debt collectors not only from harassing you but also stops all collection attempts completely. This includes lawsuits that are already filed, judgments, wage garnishments, and even foreclosure proceedings. With the assistance of a bankruptcy attorney the bankruptcy process can even protect many financial assets and personal property including one's home. The two most common chapters of personal bankruptcy filed are Chapter 7 and Chapter 13 Bankruptcy. Which chapter of bankruptcy that one should file is best left to the expertise of the bankruptcy attorney. There are several factors that determine eligibility for bankruptcy and the chapter filed which is why an attorney is invaluable when filing. In a nutshell, a Chapter 7 Bankruptcy eliminates all unsecured debts such as credit cards, personal loans, and medical bills. It is not common for the debtor to lose assets in the process, unless they choose to give them up, due to exemption laws that protect personal property. A Chapter 13 Bankruptcy differs in that it is a repayment plan set up over the next three to five years where the debtor pays back the debt. The secured debts get priority in the payment plan with the unsecured debts getting anything left over after all else is paid off. If there are any unsecured debts left at the end of the scheduled payment plan then they are eliminated in the Chapter 13 discharge. The bottom line is that with either chapter of bankruptcy filed, the debtor has the peace of mind that they are protected under the legal system while they attempt to take control of their life and finances. At the end of either chapter of bankruptcy the debtor will emerge debt free and ready for a fresh start.