The financial crisis of 2008 had a devastating effect on the United States economy, particularly on the financial sphere, the real estate industry, and the job market. As a result, many Americans were attacked on literally all fronts. While their homes sharply began to fall in value, taking all of their equity with them, they perhaps lost their job and remained unemployed for a good period of time. Even a small period of unemployment can devastate many consumers who are balanced precariously between their debt obligations and other financial necessities. However, when consumers do find themselves being crushed by the weight of their debts, they may seek help through credit counseling services.

Credit counseling services are designed to better educate today’s modern consumer about the basics of credit, how to apply for financial aid, and what factors banks and credit unions evaluate in order to calculate interest rates. This education will hopefully allow American consumers to become more financially responsible in their future days. However, one of the other main functions of credit counseling services is to help consumers that are already in financial crisis. When a consumer acquires a great amount of debt through credit cards, auto loans, mortgages, and student loans, it is essential that they continue to earn a steady income to pay off these debts. However, because the financial crisis of 2008 had great negative effects on the job market, this is not always possible for today’s consumers.

This can result in consumers defaulting on their debt obligations, which in turn can result in extra charges on their account from their financial institutions. This dangerous situation can quickly become a never-ending circle of debts, late fees, and increasing interest rates if the consumer does not seek restitution. Restitution for consumers in these situations can come from a variety of places, such as bankruptcy, debt consolidation, or debt restructure services. Bankruptcy itself is a type of debt restructure service for consumers that qualify! There are two main types of personal bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is the most well known of the two, as well as the most drastic.

For those consumers that qualify, Chapter 7 will wipe all debts away completely. However, the consumer must be in a seriously desperate financial situation for this to happen! Also, with Chapter 7 bankruptcy, the consumer will also need to forfeit all of their existing assets to the court in charge of their case. This is why Chapter 7 bankruptcy is also called a liquidation! Chapter 13 bankruptcy is much easier for consumers to apply for. With Chapter 13, the consumer will have their debt reorganized into a more manageable amount. When a consumer applies for Chapter 13 bankruptcy, the court in question will have a staff of financial analysts review the consumer’s personal finances. After evaluating this information, the court will decide on an appropriate amount for the consumer to pay to each of their lenders.

This debt restructure service is a great way for consumers with tremendous amounts of debt take charge of their personal finances! However, if the consumer wants to avoid bankruptcy at all costs, which is definitely advisable, they may be eligible for debt consolidation services. With debt consolidation, another form of debt restructure services, the consumer will have a debt negotiator or advocate contact each of their lenders individually. Then, when the advocate agrees on a discounted amount for the consumer to pay, the consumer will then pay off all of their debts with one consolidated loan. This helps the consumer avoid future payments that would have made towards late fees and interest rate charges, while also allowing them to get out of debt, fast.

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