In Idaho and around the country, it has been remarkably easy for borrowers to find themselves in a situation where credit card bills may spiral out of control, and the need for debt relief has been never more important. Even during the boom times of the last few years, when the economy of Idaho and the rest of America was blithely spinning along (and, perhaps unfortunately, credit was too freely given), our citizenry continued spending more than they earned, and, now that our financial system teeters upon the brink of total collapse, these personal debt balances threaten the household stability of countless Idaho residents.
With these debt loads continuing to grow – the inevitable consequence of compound interest rates set as exceedingly high as the credit cards would allow – all but the most self destructive of Idaho families have begun researching their debt relief alternatives. Most of them are more than familiar with the Chapter 7 and Chapter 13 bankruptcy protections, though a surprisingly large percentage of Idaho borrowers seem unaware of the dramatic changes that have been written in to the United States bankruptcy code following the passage of 2005 legislation by the congress, but there are a good variety of other debt relief plans out there with which Idaho consumers may be able to finally liquidate their loans for good. When examining their household budgets many Idaho families will find out that they have honestly no other choice but to employ Chapter 7 bankruptcy protection for successful credit card debt relief, but that does not mean there are not further solutions available which could offer the same eventual elimination of unsecured loans without the problems (everything from lowered credit scores to attorney costs to property seizure) that bankruptcy necessarily entails.
We mention credit card debt elimination services because these sort of loans tend to have the highest interest rates and the least possibility of some benefit to the Idaho borrowers. Loans that are secured to actual property like home mortgages and car loans should feature considerably lower rates of interest, and, in many instances, they may even serve as effective tax breaks (mortgage loans on primary residences, particularly) for borrowers with sufficient levels of income to have that inform their debt relief strategies. Moreover, when we talk about unsecured loans, we are really talking solely about those unsecured loans (medical bills, charge cards, consumer loans, and, the greatest hindrance to Idaho borrower’s personal finances, credit card accounts) which could potentially be eliminated through a Chapter 7 bankruptcy discharge. Once again, given the aftermath of the 2005 congressional legislation which weakened bankruptcy protection and made it far more hazardous for any consumers to successfully file for bankruptcy and then endure the privations, we do not entirely encourage the procedure for most borrowers. As a matter of fact, under the new bankruptcy code, Idaho borrowers would find it hard pressed to even enter the Chapter 7 debt relief program if they have earned more than the median income for residents of the state in the half year prior to filing for bankruptcy declaration. That’s right, no matter the amount of debt that the Idaho borrowers are carrying (which, for an extended period of hospitalization could easily run to the high six figures in virtually no time at all), they could be prevented by national laws from even attempting to liquidate their applicable financial obligations through bankruptcy simply because they had a particularly good run at business and even if, with current economic indicators appearing so dismal, there is no likelihood the profitability would continue.
There are a few different things that borrowers still desperate for a debt relief grant may do to reclaim Chapter 7 eligibility despite their income – specifically, there is a means test that allows Idaho residents who earn a bit too much to claim neediness by showing that, after deducting all necessary expenses (counting utilities, household cost of living purchases, and all debt payments both secured and unsecured), they would not be able to pay one hundred dollars a month to their assembled creditors for the next five years – but, unfortunately, the new bankruptcy laws limit the analysis and leniency with which the trustee appointed at random by the Idaho courts evaluate each case. Even more potentially bothersome, those cost of living expenses do not take into account the actual expenses of a given household but instead solely use the figures that were set by the Internal Revenue Service for average Idaho families which, for borrowers living in a particularly nice part of Boise, could be extremely misleading. Attorneys experienced in both Idaho bankruptcy law as well as the new federal regulations could be incredibly useful when helping borrowers figure out the most effective way to utilize debt relief grants as a method of debt relief, but, with the clamor for bankruptcy declarations seemingly growing by the month as the economic situation worsens nationwide (Idaho very much included), the fees charged by these experienced lawyers have increased alongside. Alongside the administrative costs and the debt relief courses (another side effect of the 2005 legislation) now required before bankruptcy declaration as well as again before bankruptcy discharge which the potential bankruptcy filers must pass and pay for themselves, it turns out the poorest Idaho consumers who most need debt relief could be effectively disallowed from even considering the bankruptcy protection.
For those borrowers who earn a low enough income compared to other Idaho households that they would qualify for the tax debt relief while still maintaining enough disposable income or funds tucked away in savings that they could potentially use to pay for the law firm (do not expect the bankruptcy attorneys, as should seem utterly reasonable, to accept credit), the newly designed problems of Chapter 7 debt relief bankruptcies do not end there. Borrowers in Idaho and across the country have grown accustomed to the notion that some of their more high priced assets – a boat, say, or a stake in a liquid investment opportunity – would be at the mercy of the court trustee and could theoretically taken by local court officials for eventual auction to attempt to repay the various creditors whose claims to unsecured debts had otherwise been eliminated through the bankruptcy process. Yet what is debt?
That threat still stands, but, according to the way the code is now written and forcibly carried out, the Idaho borrowers shall have to list all of their personal possessions by degree of potential replacement value rather than the far more lenient resale value. The repercussions of help with medical bills that detail, barely reported at the time of legislation, could mean that virtually every thing that the borrowers would own may be seized upon the discretion of the courts. Residents of Idaho are rather luckier than their borrowers across the country when it comes to dealing with this particular problem as the state exemptions set down under Idaho law shall guarantee that the most important aspects of household furnishings and family mementos will be rendered safe from government intrusions. None the less, there’s a clear limit to how much could be exempted, and many Idaho borrowers interested in debt relief bankruptcies shall have to gird themselves for the possibility of losing property that may range from second cars to home entertainment systems to even, after a certain amount of recognized value, their clothing and furniture.
Stacked up against the costs that we have shown bankruptcy debt relief to inevitably contain, the potential for property forfeiture, and the clear damage to Idaho filers’ credit reports and FICO scores, credit card debt relief counseling may not be the best alternative even for those borrowers who manage to qualify for the program. Chapter 13 shall be another option – one that boasts the same monetary expenditures and similar difficulties regarding credit scores – which should let alone the borrowers’ possessions and assets, but, since the Idaho borrowers shall have to repay a majority of their debts while subjecting their household to a budget drawn up by Idaho court trustees that will have to use the same (again, almost always drastically low when set against the true figures) expenses that have been calculated by IRS bean counters, this can result in grave changes in life style. Honestly, aside from those Idaho borrowers that truly believe they have to chance the Chapter 13 debt relief program to save their home from foreclosure, there’s simply not much that this sort of bankruptcy could offer the ordinary Idaho consumer. We do appreciate how important their primary residences should seem for ever resident of Idaho, and, of course, we have seen how the falling real estate market and rising unemployment rates combined with the previous actions of predatory mortgage lenders to drive home foreclosures to unprecedented levels in Idaho and across America. Nevertheless, if at all possible, borrowers should begin their own attempts at debt relief well before this sort of decision about whether or not bankruptcy’s needed would even come in to play.
Of course, most of our Idaho borrowers have likely tried some variance of credit card debt relief program on their own, and, from our discussions with consumers throughout Idaho, they have likely repeatedly attempted to quell spending instincts on a regular basis to avoid just such an eventuality. Unfortunately, leaving aside the good number of consumers in Idaho that need debt relief assistance because of medical problems or some similar familial emergency, it has simply been too easy for households to blithely ignore the mounting pressures from their escalating debts and indulge poor spending habits; indeed, some research suggests that borrower may actually spend more when confronted with out of control credit card bills as a way to alleviate stress and tensions. Much of the fault lies with initial budgeting procedures.