Ever larger numbers of Americans are realizing that they have to do something about their accumulating credit card debts, and the people of Alabama are no exception. Seems like consumer debts are affecting folks from all walks of life, and the need for effective debt settlement has never been greater. However, just as borrowers in Alabama and throughout the south are beginning to realize that they truly need to deal with their mounting debt loads, many of them are too quick to look for the easiest debt solution once they have decided that help is needed. Debt relief means many different things to different people, and the realities of debt settlement depend so much on the specific debt AND their state of residence. While all citizens tend to read the same magazines and watch the same channels these days, debt settlement in Alabama can have separate rules and regulations than debt settlement in another state. Within this essay, your authors would merely like to outline the most practical information about Alabaman debt settlement firms and procedures. Recognizing the need for credit card bill elimination is an important start for every borrower, but there's much more to learn before choosing any one option.
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Among the reasons that consumers so quickly grasp the first debt solution alternative presented, of course, is the continual pressure applied by predatory collection agencies who'll say absolutely anything in order to sufficiently frighten borrowers that they forget about their true priorities. Remember, bill collectors are not licensed by the state of Alabama, and their threats not only present virtually no truth but rarely have any relation to the truth. For example, many of the more successful collectors have been trained to frighten debtors with stories of garnished wages, but this would almost certainly not be the case. No matter the claims collection agencies might spin, a lender in Alabama would have to obtain a judgment by trial in a court of law and then garner a separate a writ of garnishment against you.
In Alabama (or the rest of the United States of America, for that matter), you will know about this well ahead of time by either a summons delivered by a member of the sheriff's department or through certified mail. By law, the lender will have to do whatever necessary to inform you of a lawsuit - up to and including, in Alabama, publishing a notice in the largest paper of your county (or the last county that you lived in) - but even that doesn't really matter. Lawsuits are extraordinarily expensive for creditors, and it's virtually inconceivable, especially in this age of crowded court rooms and public dissatisfaction with mercenary creditors, that they would bother spending the time or money when, given the notification time (two weeks or a month depending on whether or not it's a small claims or circuit court lawsuit) necessary by law, those few borrowers facing a lawsuit would likely just declare bankruptcy in the mean time.
This does not, however, mean that your authors would ever suggest bankruptcy as a form of debt management for any but the most desperate and unlucky of borrowers. Within the past decade, bankruptcies in Alabama kept escalating until, five years ago, they passed forty thousand. In other words, that means a household in Alabama files for bankruptcy just over every ten minutes, and the number continues to grow. It's understandable, of course, why borrowers might choose this option. With seemingly un-payable bills ever more pressing, one's thoughts naturally turn to Chapter 7 debt elimination, but 2005 legislation completely altered the United States bankruptcy code and made Chapter 7 bankruptcies far more difficult to endure - and more difficult to even enter. Independent of the amount of money you actually owe for secured and unsecured credit obligations, borrowers must now put themselves through what's knows as a means test to determine their qualifications.
For the people of Alabama, this means they have to demonstrate that they made less than the median income of wage earners of their state (currently $36,192 for an individual though this changes every year) as assessed by the national census. You can still earn up to fifteen hundred a year beyond that through a variety of different deductions (everything from educational loans to mortgage payments to tax liens and child support), but, if, at the end of the day, after these deductions and the Internal Revenue Service sanctioned cost of living expenses, the courts find that six thousand dollars a year (or five hundred dollars per month) could be still reasonably handed over to the lender, then you'll have no choice but to enter the Chapter 13 debt redistribution bankruptcy. To be sure, there are also reasons for Alabama debtors to enter the Chapter 13 - if you are already in foreclosure, this program may be the only legal way to save your primary residence or homestead - but, in essence, it's merely another form of debt consolidation with harsher guidelines and little to no debtor say in the matter.
Even with Chapter 7 debt liquidation, there aren't many reasons to opt for bankruptcy protection unless you genuinely have no other choice. Although Alabama provides a good deal more in the way of exemptions as compared to what's tenuously granted by the federal government and the Internal Revenue Service, you will still have to risk virtually all of your possessions (beyond those things specifically guaranteed under Alabama law such as church pews and burial plots and family portraits) to court seizure for the repayment of past creditors. Further, for borrowers presumably already having a tough time making ends meet, you will have to shell out the cash up front to pay for a bankruptcy attorney.
Considering all of the congressional changes to the bankruptcy code and the varying state regulations (and the criminal penalties that will almost definitely be assessed should you fail to perfectly fill out the reams and reams of ever more complex paperwork), it's increasingly necessary to take advantage of the services of an experienced bankruptcy lawyer within your area of Alabama - and, believe it or not, bankruptcy attorneys do not work on credit. Furthermore, under the new laws, before you can even declare bankruptcy, you will have to pass a thoroughly useless course on debt counseling from one of the few agencies in Alabama certified by the federal government, and, even beyond the demands on time required from heads of household likely already swamped by their (perhaps, multiple) jobs, you will have to pay the substantial fees out of your own pocket.
This is just one of the many benefits that debt management companies allow the harried Alabama borrower. While these sorts of businesses do not provide their services for free - although, it should be said, the professionals employed by such firms charge far less than the fees requested from bankruptcy attorneys - they will allow their costs to be subsumed within the overall debt consolidation beyond some negligible introductory fee to discourage those looking without true curiosity. With these companies, we're largely speaking of Consumer Credit Counseling and debt settlement companies, have risen in popularity in past years as debt loads have increased for Alabamans and all Americans because of the debt management companies' demonstrated success in lowering interest rates and, in the case of debt settlement, actual debt balances.
Both of these debt approaches focus on consolidating all existing unsecured debt burdens under the company's imprimatur and then negotiating with representatives of the lenders. In the case of Consumer Credit Counseling, these negotiations rarely ask for much more than a marked reduction of interest rates plus a waiver of past fees for borrowers being late with their payments or going over the limits. This can be helpful, assuredly, the Consumer Credit Counseling companies' malleable payment schedules especially aid those borrowers down on their luck who need absolutely minimal monthly obligations, but there are less advantageous aspects to this approach as well.
Even beyond the sizable fees that Consumer Credit Counseling companies ask from their clients, many of these firms also request even greater sums from the credit card companies as well. While they obviously do not publicize this element of their recent ubiquity (and, considering the advertising budget for the Consumer Credit Counseling industry, you'd surely have noticed), it should make previously interested debtors wonder about whether or not this method of debt management would be the best possible fit.
Debt settlement firms, on the other hand, endeavor to take a far more adversarial approach to their negotiations with the credit card conglomerates behind your loan balances and, combining the threat of bankruptcy and the promise of rapid repayment (under sixty months, essentially guaranteed), manage to lower the overall consumer debt load of their clients by as much as sixty percent of the original. Also, especially compared to Consumer Credit Counseling (whose disastrous consequences as to FICO scores and credit ratings rival that of Chapter 7 bankruptcy), debt settlement negotiations have hardly any effect regarding credit scores. It's certainly not the correct alternative for every family. Many Alabama households, given the heightened compensation schedule, simply will not be able to make the payments necessary for the program to succeed, and, though we see this less and less, some of the multinational conglomerates that hold your credit cards still refuse to negotiate with the debt settlement firms.
Once again, no matter how much the information contained in this article should be of some use to interested Alabama borrowers and their families, it is still up to you to determine for yourself which system of debt relief would be best. While we certainly advise you to investigate the debt settlement solution - either from a local Alabama company or one of the national firms available on line - it is not, as we have written, the perfect option for each debtor. Furthermore, it behooves the careful borrower to, even after they have decided upon an approach that they wish to employ, study each company well before walking through their doors or clicking on their web site.
Talk to the Alabama chapter of the Better Business Bureau and see if they have recorded any complaints or check with the chamber of commerce from whichever Alabama municipality you're currently residing in to see if they have any specific suggestions. Debt settlement can be of near miraculous aid when handled properly, but this is the financial well being of you and your family that we're talking about. Be very, very careful about what you are getting yourself into before attaching your economic future to any one company. Even a vaguely competent and experienced debt settlement company would be preferable to bankruptcy for all but the most unfortunate Alabama debtors, but, considering the breadth of professional debt settlement businesses now available, make sure you get one of the best.
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