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Monday, March 7, 2011

How Debt Settlement Affected American Economy in 2010 - by Sophie Kinsella

The alarming rise of filing bankruptcy in America gives an ominous signal that the gloomy shadow of recession is still lingering on. When the economy is struggling hard to come out of the memory of financial nightmare, the 2010 statistics shows how almost every part of the country is dozing under economic insolvency, pushing a large segment of American public into filing bankruptcy. Job loss, cuts of working hours, non paid medical bills, delinquently settle credit card debt were some of the basic reasons, nudging the people to look for bankruptcy. The creditor’s continual harassment proved to be the strong catalyst that finally drew the last nail on the coffin. Can you imagine that only in Nevada and Georgia every 15000 out of one million was filing bankruptcy? And the total number of U.S citizen filing bankruptcy had reached 1.53 million in 2010 alone.

In 2005 the Congress decided to amend bankruptcy law in an attempt to check the public rush towards filing bankruptcy. But still more people desperately headed to this option as a means to revamp their economy despite additional cost and legal hassle.

That time a debate became rife how to refurbish American corporations by taking some measures like cutting social spending, slashing tax, and bringing regulation on big business or by paying down wages.

In such a financial crisis when millions are stumbling to pay their utility bills, the corporation and banks are gleaning huge profit. Those holding high profile designation are enjoying high payouts and Obama administration is giving tax exemption to the corporate elites.

The plummeting value of residential property or real estate had come to no use for those who tried an equity loan to save their face. Previously an unemployed American could have got his home equity to ward off the pressure of his existing loans. Now the sinking values of real estate proved to be too in comparison to the credit a home owner used to owe. .

Subsequently Obama administration came up with a relief program for the Wall Street bankers offering them trillion dollars. But did they extend their helping hand to the working mass. Practically they were apathetic to the common mass that had lost their job. The Home Affordable Modification Program initiated by U.S Treasury Department yielded little result as only half a million mortgage holders were able to retain their home and prevent mortgages from liquidation. We saw nearly four million house holders were served fore closer notice that time by the court.

In this scenario some even went to the extent of believing that another depression was going to usher in the country.

Author's Bio: Sophie Kinsella is a contributory guest columnist for various websites and communities including CMFA . She has completed her Graduation in Finance and is currently working with an Investment company located in California. She has written some great articles on topics like bankruptcy, investment opportunities, debt settlement etc.

2 comments:

  1. Thanks Sophie for the great article. Please post again soon.

    ReplyDelete
  2. Sure Grouch it will be a pleasure for me :)

    ReplyDelete