The biggest problem that America suffered from during the financial crunch and which almost sealed her fate as a financial disaster is when big financial institutions made the mistake of lending money to sub-prime borrowers. As a greater part of these borrowers declared bankruptcy, the lenders found themselves holding onto useless assets. Situations worsened and even the financial institutions were on the verge of bankruptcy themselves, as they tried to recover as many debts as possible to stave off their own bankruptcy.
As President Barrack Obama came into the scene, things started to light up a bit. What Obama had on offer was $787 billion of stimulus money for the economy. Unquestionably, a huge part of it was for the bail out of the financial institutions. But the resulting environment could also be used to eliminate debt. Now, what must be understood is that as financial institutions were secured, they tried to be a little more lenient towards their debtors. This way Obama’s stimulus money started bringing in a sense of security, which in turn was directed to eliminate unsecured debt, incurred by consumers.
As a result of the presence of federal funds, financial institutions were sure of their secured future. But Obama’s stimulus money can also be used directly as personal bail-outs to eliminate debt. Since a declaration of bankruptcy only means that a person have completely defaulted his account and since his assets are now worthless, specially mortgage papers, major creditors such as credit card companies, banks, medical institutions, and government programs are more than willing to negotiate a debt settlement to recover at least a percentage of their lent money.
Desperate times call for desperate measures. Since there are so many people in need of personal bailouts, creditors are now forced to settle personal credit for percentages that were never heard off even a year ago. A legitimate and successful debt relief company will be able to negotiate a settlement for 50% on average, which will have minimal impact on your credit history. Hence, it has now become easier to eliminate unsecured debt, because even the creditors are trying their best to get out of the mess.
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