Put simply, the American economy is premised on consumer consumption. After the United States abandoned the gold standard, the printing of fiat money – money not backed by gold – enabled the government and private sector to debt finance so-called economic growth. In order to keep the economy afloat, banks encouraged consumer spending as a way to maintain demand for housing, cars, electronics and other goods. As a result, in the late 1980s and 1990s, it was much easier to get a credit card, regardless of one’s credit history. Coupled with a growth in consumer spending, the “dot com” craze led to an inflation of stock prices of over-valued companies. At roughly the same time, the subprime mortgage craze hit the housing market which contributed to the housing bubble. In order to avoid a crash, the Federal Reserve under Alan Greenspan lowered interest rates and encouraged even more borrowing and consumer spending in the hopes of staving off a collapse.
The results are now clear to everyone: the US economy is in a period of recession, and possibly on the verge of a depression as the housing market collapses, companies lay off their workers, financial giants close their doors, and banks sit on money given to them by the government in its so-called “bailout” plan of October 2008.
What can the average homeowner/consumer do to protect themselves? At the law office of Chang & Diamond, we help clients file for bankruptcy, and adopt financial management principles that can help them survive today’s economy.
Taking Control of Your Mortgage
Carefully review your variable rate mortgage, especially if you find it increasingly difficult to pay your monthly mortgage bill. At the law office of Chang & Diamond, our attorneys can help you evaluate your legal options about your current mortgage situation. Depending on your situation, it may be in the bank’s best interests to modify your loan rather than having you go through foreclosure.
Credit Card Debt – Avoid Debt Consolidation Companies
Debt consolidation companies promising to consolidate your credit card debt and negotiate a lower interest rate and minimum monthly payment aren’t always the best option for getting out of debt. The truth is, most of what you pay in the first six months goes to cover the fees these companies charge for their “services.” Secondly, in some cases, once a debt consolidation company gets involved, a bank may demand immediate repayment on your debt since no automatic stay is in effect. Believing you may file for bankruptcy, a bank may call in outstanding debt in the hope of collecting as much as possible before you declare bankruptcy.
If your credit card debt is to the point where you can no longer afford making even the minimum monthly payments, filing for Chapter 7 or Chapter 13 bankruptcy may be the best option for you. Our lawyers can evaluate your current financial situation and explain the options available to you.
Business Owners and Work Outs
Small business owners may find themselves facing bankruptcy if a bank determines you are “out of formula,” a situation where your ratio of debt to assets requires a bank to call in a loan. However, if Chapter 13 is necessary, we work with the court appointed trustee to ensure that the terms proposed for your debt organization allow you to stay in business.
Surviving Today’s Economy – Contact Our Bankruptcy Attorneys Today
We have the experience and knowledge needed to help homeowners, businesses, and individuals in survive today’s economy. Regardless of whether you are contemplating bankruptcy or looking for ways to avoid it, contact Chang & Diamond, APC today to schedule a free consultation to discuss your case.