Over the last couple of years, many Americans have become buried under a mountain of debt. Most people want to avoid filing bankruptcy at all costs so they make minimum payments and kick the can down the road. At some point in time, it’s inevitable that bankruptcy filing is just around the corner. Why are people waiting so long to file, when deep down they know that there is no other way out? But now there is an alternative to immediate bankruptcy from the US government. These are the same folks that brought us Affordable Healthcare, the IRS, the United States Postal Service, massive debt and the deficit that is impossible to dig ourselves out of. Last week, it was announced that the federal government is going to use the Post Office for payday loans. Now, you don’t have to go to one of the local loan shark payday offices, they just go down to the local post office and sign your life away. If you ask me, it’s complete craziness. Everything the government touches ends up benefiting the few that don’t deserve it and costing Main St., America dearly. The group behind the idea believes the financially strapped Post Office will be able to get themselves out of hock by going into the loan shark business.
In American culture, planning has become a big part of our lives. You see financial planners on TV talking about preparing for the future with a 401(k) or an IRA. Nothing’s wrong with planning, but when you’re in debt the only financial planning a person should be considering is filing bankruptcy, not getting payday loans to get by. Now that the government is planning on making it easier for people to go further into debt instead of out of debt, you can throw all financial planning to the wind. Most Americans are optimistic and always look for short-term solutions rather than the ones that cause them pain and their spending habits. That’s another reason for the popularity of payday loans as they provide an immediate solution and allow the individual to kick the can down the road for another week. The sad thing is, these 300% loans end up taking the individual’s entire paycheck just to pay the interest at some point in time. At that point in time, this person is almost too broke to even file bankruptcy. The good news is, payday loans are dischargeable in bankruptcy so the debtor can get away from them if necessary. At least this is as of now. It wouldn’t surprise me to see the government change the payday loan regulations to something similar as student loans where it is next to impossible to discharge it in a bankruptcy.
When someone becomes overwhelmed with unsustainable debt, instead of using a financial consultant to see what could be done, they should be speaking with a bankruptcy attorney about other debt solutions. Filing Chapter 7 bankruptcy will wipe out all unsecured debt including payday loans and leave many individuals virtually debt-free. This is pretty powerful financial planning when considering that the outcome only takes about 4 to 6 months. There is no other program in the world that offers this kind of results. These results come at a price as most people know that it will take a heavy toll on one’s credit. If you consider the alternatives and already know that an individual filing bankruptcy probably doesn’t have very good credit anyway, it starts looking much better. Before making any kind of decision of what to do, one should add up all of their bills and figure out how long it would take to pay them off if they stop charging today. If it takes longer than five years, the person should seriously consider the possibility that a bankruptcy filing might be around the corner.