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The allure of fast cash directly deposited into your bank account within 24 hours may sound appealing but as The New York Times recently reported, consumers should be extremely cautious when it comes to the pitfalls of signing on the electronic dotted line.

The article, citing data from the 2014 four part series, Payday Lending in America, facilitated by The PEW Charitable Trusts, a research organization dedicated to taking an analytical approach to improve public policy through advancements and dedication to civic life, found that the practice of payday loan advances were extremely detrimental and dangerous to the indebted American consumer.

Borrowing from one of these lenders may be found even more damaging to one's credit and bank account than if one opted to consult with an experienced bankruptcy attorney and petitioned for debt protection under Chapter 7 or Chapter 13 bankruptcy. Furthermore, Pew's report highly recommends the adoption of firmer regulatory guidelines by the Consumer Financial Protection Bureau to combat the complaints generated by unsuspecting consumers.

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Several respected financial analysts predict that the U.S. will continue to experience a decline in the number of bankruptcy filings in 2015. Some data suggests an estimated 800,000 bankruptcy petitions will cross the judicial bench of district bankruptcy courts across the U.S. this year. For those individuals or families considering joining the ranks, understanding the advantages and disadvantages of bankruptcy or debt consolidation is the first step in either process. Consulting with a debt counseling professional or experienced bankruptcy attorney is highly advisable.

Before scheduling a consultation, the following brief summary of both options may prove helpful.

Debt Consolidation

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For many homeowners, a loan modification request is much like a ride on a Ferris wheel. The lender offers assistance through HAMP or some other federal program, raising hopes and expectations. Then, the bank suddenly withdraws its offer, many times based on technical grounds, such as turning in documents a day or two late, a Debt To Income ration that is a few points too low or a Loan To Value ratio that is a few points too high. This rejection is followed swiftly by another assistance offer, and the wheel starts moving again.

All this time, the bank is generally not accepting partial payments, so the delinquency keeps getting higher and higher. Eventually, the Ferris wheel stops. The lender soberly declares that the delinquent amount is too high to be repaid. Foreclosure follows.

Chapter 13 Bankruptcy may offer distressed homeowners a way to get off the Ferris wheel and get on the tram that takes you where you want to go.

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The economy may be showing some signs of improvement, but the outlook remains bleak for many Illinois homeowners. The Land of Lincoln has one of the highest home foreclosure rates in the country. One in every 663 housing units in the state received a foreclosure notice in December. Many homeowners fell behind on payments due to a job loss, sudden illness, portfolio reversal or other temporary income loss. But if you fall even three or four payments behind, it can be almost impossible to catch up. If the bank is trying to take your home, Chapter 13 bankruptcy may be your best option.

Automatic Stay

The moment you file your voluntary petition, an automatic stay goes into effect. No creditor can take any adverse action against you and no foreclosure sale can go forward without special permission from the bankruptcy judge.

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To say “every American has debt” is not so far from the truth. According to some reports, American consumers owe $11.63 trillion in debt as of Sept. 2014. That is more than half of the country's national debt.

Although debt is not inherently evil, it has reached unbearable levels for many Americans. For some, proper budgeting and prioritization of purchases can help; for others, however, bankruptcy might be worth considering.

How does one determine if bankruptcy is a smart option? The first step in answering this question is examining personal finances and debt. Then, it is wise to speak to a bankruptcy attorney to learn the intricacies of the law and how they relate to your case.

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