By financen | May 14, 2009 - 3:30 pm - Posted in Debt, Recession

Most of the major financial institutions in US have been led to file for bankruptcy due to the current recession and this has caused a domino effect of social issues in today’s society. The working class has been tremendously affected and it was unexpected. It was like everyone wake up in the morning and realized that the world was suffering from an economic slowdown and large number of companies from different sectors are closing up or taking drastic cost cutting measures.

Companies that are still existing during the recession period are engaged in downsizing work forces, rotating man power or outright layoffs due. This has put many people into a situation where they are getting half or less than half of their wages and those who got jobless got nothing at all. Unemployment has drastically gone up and the job markets are getting saturated with jobseekers adding far more competition to the already large amount of high school and college graduates looking forward to getting into the working class. This has caused people getting into severe debt problems.

Most of the average Americans will have several loans taken out under their name like the car loans or home loans. An individual may have 2 – 3 credit cards with a high outstanding balance on each account. These kind of debts can be easily paid back if you have a regular income and keep your credit in good standing. But the problem arises when an unemployment occurs and everything reaches to a point of stalemate and the existing debts starts hounding you. Things will get tough to manage and that’s the time when most people start looking for some professional help like a debt management or a debt negotiation program.

An unemployment check from your social security can help you in the short terms when you are in between jobs and pay off some of your existing loans. What will happen to the long term goals? There is no guarantee that the new job that you might get will pay the same like you used to earn in your previous job especially at the current financial market. Priorities will drastically change in times of need. One would prefer to feed his family over amortizing a car loan any day.

There are many non profit debt consolidation companies who can help you in coming out of this debt situation. A financial advisor will look into your present financial situation and calculate your monthly income and expenses. Once he gone through your budgeting, he will work out an affordable repayment plan with your creditors. If you are not in a situation to afford your monthly payments in the debt management program, then he will negotiate with your creditors to settle the balance for something less than half so that it can be paid off in one lump sum amount. You need to have a lot of patience, time and discipline when you are looking for such a program.

This entry was posted on Thursday, May 14th, 2009 at 3:30 pm and is filed under Debt, Recession. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.


  1. May 31, 2009 @ 4:42 am

    Chapter 13 bankruptcies are a type of “debt consolidation” allowing you to reorganize your finances by consolidating your debts into one monthly payment. Chapter 13, however, should not be confused with other types of debt consolidation programs….such as consolidation loans from a bank or finance company OR credit counseling payment plans which often take huge fees. Chapter 13 has the power of the Federal Bankruptcy Code behind it, and provides many advantages for people seeking debt relief.

    Posted by 1Clickbankruptcy
  2. October 25, 2009 @ 6:25 pm

    Surprisingly the uk economy shrank a further 0.4% between July and September (the last quarter that there are figures for), so the end of the downturn is a long way off yet – another 6 months at least i reckon, its the longest recession since records began 50 years ago and it wont be till years later the economy and property market recovers, it was’nt until the late 90’s that the property market recovered after the 89/90 recession.

    Posted by tory lane