Can the Government Help You Get Out of Debt

Tuesday, August 14, 2012

Can the Government Help You Get Out of Debt

You are drowning in debt and you don’t know how to get out of it. Whether it was a result of years of reckless spending or your company streamlined and you were let go, the sad fact now is that you are badly in debt.

Your house is facing foreclosure, collectors are incessantly breathing down your neck to make your payments and worse, you have kids to take care of.

Don’t lose any more sleep over your financial difficulties. If it’s any consolation, you’re not the only one facing financial problems at the moment.

Thousands of other people from all over the world in fact, are in the same boat as you are and thousands more were in the same boat years before, but they managed to get out of debt.

Can the Government really help?

This could be a nagging question that you’ve been playing in your head over and over again.

You are a citizen of your country and it is your government’s responsibility to ensure that you live a comfortable life but unfortunately, this does not cover getting you out of debt – unless you are prepared to take the drastic measure of filing for bankruptcy.

Filing for bankruptcy is the only clear-cut answer to your question of whether or not your government can help you get out of debt.

While this may seem like the best solution to your debt problem, it is not as promising as it appears.

Filing for Bankruptcy: The Downside

When you file for bankruptcy, there are two ways that your debt is addressed: liquidate your assets to pay off your debts or agree to payment terms set by the government, usually over a period of three to five years, while being allowed to keep your house, car and other mortgaged assets.

While this may seem like a promising solution to your debt woes, the downside – and a very huge downside at that – is that this bankruptcy clause will remain in your credit history for at least a good ten years.

What this means is that you will basically forfeit your rights to take out a loan from a financial institution. You will no longer be eligible for a credit card. You will find it more difficult to open new bank accounts and in extreme cases you may even be deemed as a “high risk” for employment, which means that companies may turn down your application, making it more difficult for you to find a job.

You may also face difficulties when applying for life insurance.

This being said, it is not recommended that you file for bankruptcy as the repercussions will resound for the next ten years which may make life more difficult for you in the long run.

Also, bear in mind that just because you have finally decided to bite the bullet and file for bankruptcy it does not mean that your request will be granted.

The government will have to make a thorough investigation of your financial situation and they will have to see that you are truly unable to pay your debts before your application can even begin to see processing for approval.

Study Your Options

Before you throw in the towel, it is advised that you study all your options. You also have to take full responsibility for your financial situation. Instead of running from your debts, face your collectors and talk to them about your financial situation.

You might be surprised at how open they are with helping you work on your debts. They can help you work on a new payment scheme that will make it easier for you to meet your monthly payments.

The point is your situation is not so impossible to work on that you will forever live in debt. Honesty with your creditors and discipline in your spending habits are two sure-fire ways that can help you climb out of your debt rut.

About the Author:

Mike is a freelance writer and content builder of

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