From The Oliver Law Group: Recalibrating the Value of Unsecured Debt

Dec. 13, 2010 - PRLog -- By Bert Oliver, Esq.
The Oliver Law Group, P.A.

A long-term, worldwide process of “recalibrating” the values of assets is now underway. Real estate provides the most vivid example of this trend, with the dramatic decline in U.S. home values during the past few years. In response to this shift in market conditions, mortgage holders are now writing off a significant portion of their secured debt through foreclosures, short sales and other adjustments.

Far less attention has been paid to this recalibration process in relation to unsecured consumer debt – primarily credit cards. Statistics from the Federal Reserve indicate U.S. credit card debt reached $852.6 billion in March, 2010 – roughly one-third of the nation’s total consumer debt of $2.5 trillion.

In today’s difficult economy, many Americans have had little choice but to rely on credit cards when facing hardships such as a costly illness, unexpected home repairs or loss of a small business’ credit line. The result: individual credit card debt, and monthly payments, have soared beyond many debtors’ ability to pay.

For creditors, the financial rewards of high consumer debt balances must be balanced by the likelihood of losing 100 percent of those unsecured assets in the event of a personal bankruptcy. Recognizing that reality, creditors are quietly recalibrating some unsecured debt balances in certain circumstances. However, they do their best to retain control of those negotiations and to bargain from an overwhelming position of strength.

Certainly, a growing number of consumers would benefit by negotiating forgiveness of a portion of their debt with creditors. However, this is usually an unfair fight. Most consumers lack the negotiating skills, financial resources or legal expertise to obtain a satisfactory result without professional help, yet consumers who seek to deal responsibly with their debt are just as entitled to aggressive, experienced advocacy as are creditors.

In our view, creditors should take appropriate steps to accommodate their credit card customers who are facing legitimate hardship and financial stress. After all, when the nation’s banking institutions cried “hardship” in 2008, the federal government made substantial accommodations in the form of “bailouts.” That recalibration of values was absolutely necessary and appropriate at the time. Now, it is necessary and appropriate for banks and other lenders to accommodate their customers at a time of financial hardship by recalibrating the value of their unsecured debt.



About The Oliver Law Group
The Oliver Law Group. P.A. was established by Bert R. Oliver, a Columbia Law School graduate with over four decades of experience as an attorney. The Firm’s veteran attorneys serve clients’ interests in four key areas: real estate, and corporate/securities, debt forgiveness and bankruptcy. The Firm’s debt forgiveness practice was established to provide legal representation as a “safety net” for individuals and families under financial duress. The Florida-based firm’s co-counsel network provides legal representation for clients with cases in markets around the country. For information: TheOliverLawGroup.com