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CONSIDERING BANKRUPCY?
"DON'T!" SAYS EXPERT
FOR IMMEDIATE RELEASE!
Valencia, CA, October 2, 2001-A leading cause of bankruptcy is consumer ignorance of available options according to Duane Anderson, CEO and co-founder of The Debt Solution, a California-based company that specializes in providing consumers with bankruptcy alternatives. "In our experience almost 80% of those who come to us considering bankruptcy don't need to," states Anderson. "Usually, consumers are either unaware of their options, or confused among the options available."
Anderson was originally trained as a physician before his own bankruptcy experience prompted a change of life and career. Today, he strictly administers to consumers' financial health through his rapidly growing company.
"Bankruptcy is so punitive that no informed person would select it as a way to resolve debt," Anderson states. "Speaking from experience, it is a highly stressful, extended legal procedure in which an individual loses financial autonomy and suffers ruined credit for a least ten years. The self-employed and those in managerial positions particularly have tremendous difficulty in resuming their careers after bankruptcy."
Other financial professionals share Anderson's assessment of the consumer situation. "I am aware of different solutions for debt," observes Jeanie Jarvis, a financial advisor for Benchmark Innovative Solutions in Valencia, California, "but when people are considering bankruptcy, they typically do not seek out a financial counselor."
"In our practice we often see individuals and businesses with financial problems who may be considering bankruptcy," states Steven Sears, a CPA and tax attorney, with offices in Tustin, CA. "Going directly into bankruptcy is like choosing amputation over treatment. There are less painful ways to save the 'patient'."
Anderson reports several alternatives for those considering bankruptcy; including, credit repair, credit counseling, debt consolidation loans and debt mediation. "We assess their situation and recommend appropriate remedies," he states. The options he gives apply only to unsecured debts such as credit cards. Secured loans, those secured by assets (typically home mortgages and auto loans) are not subject to bankruptcy as they can be repossessed.
"Credit repair" is criticized as a misnomer by some since consumers are allowed by the Fair Credit Reporting Reform Act to correct inaccurate or obsolete information from their credit files. Information that is negative, but accurate, can legally remain on a credit report for seven years and for bankruptcies up to ten years.
Credit repair is governed by the federal Credit Repair Organizations Act. Although consumers can repair their own credit, it is also available as a fee-paid service since the process requires time, persistence and some know-how. Credit repair does not address the amount of debt a consumer has outstanding, its interest rate or fees.
Consumer debt counseling services typically offer budgeting advice and debt management plans (DMPs) which may include reductions in the interest or late fees attached to debts. The service may include a consolidated payment where the consumer makes one monthly payment which is dispersed among his creditors.
Debt counselors typically have non-profit status, but are supported by creditors' "fair share" contributions (now equivalent to about 10% of the debt collected) and are restricted to creditor-approved programs. Debtors who cannot sustain the minimum payments on their credit cards are not likely to qualify for this approach.
Debt consolidation loans can assist debtors who have assets, but are short on cash. Most often it refers to taking out a new or larger home loan in order to pay off credit card debts.
The approach can yield relief by lowering the interest rate on a debt, but it also entails risk. "If a person's spending habits don't change," notes Les Whitworth, a CPA in Orange County, California, "they can rebuild their credit card balances and be worse off than before."
Debt mediation (also known as debt negotiation or debt settlement) aids those who are missing payments or making them only through extraordinary measures such as using one credit card to pay another. The approach is particularly effective for those with financial hardships connected with divorce, loss of work, ill health or legal problems.
In debt mediation the consumer confers his mediator with limited power of attorney to work out lump sum settlements on specified debts at reduced amounts. The consumer ceases their credit card payments and instead pays the mediator an agreed amount monthly to fund settlements.
Debt mediation addresses the amount owed (principle) as well as interest and fees, sometimes reducing the total obligation to as much as 40% of the original debt. Creditors prefer such settlements to the risk of bankruptcy and report such settlements "paid as agreed" on the consumer's credit record.
"Consumers need to know all of their options in making important lifetime decisions such as bankruptcy," states Anderson. "A consumers who is in the grip of debt and under harassment from creditors may not take the time to fully explore their options-they just want the pain to be over."
About The Debt Solution:
The Debt Solution, Inc., headquartered in Valencia, California, provides debt mediation services to qualifying consumers throughout the United States and Canada as a viable alternative to bankruptcy.
The program offered by The Debt Solution differs from traditional debt counseling or debt consolidation. As these do not address the amount of outstanding indebtedness, they are not designed to help individuals who cannot sustain their minimum monthly payments. The program, while voluntary, is closely supervised. It greatly reduces the stress of creditor calls and produces a consumer who is totally debt-free within 24-36 months.
The Debt Solution offers additional services that educate the debt-free graduates to manage their incomes wisely, attain financial responsibility and live prosperous lives of wealth accumulation.
For more information on the Debt Solution call (866) 863 - 5544 or visit www.TheDebtSolution.com.
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If you are interested in getting out of debt, saving thousands in interest, and having your debts settled for pennies on the dollar, sign up today for our free personalized debt settlement consultation, with one of our certified debt consultants.
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