Debt Ceiling talks heat up in Washington, D.C.

Jul 12

Debt Ceiling talks heat up in Washington, D.C.

According to CNN News, debt talks are heating up in Washington, D.C. Politicians in the nation’s capital will attempt to stop a possible government default on debt payments when negotiations resume on Thursday for the fifth straight day of talks.

Negotiations did not end well Wednesday with House Majority Leader Eric Cantor and President Barack Obama squaring off over the Republicans call for a short-term extension of the federal debt ceiling. Sources confirmed that Obama told those present that he would veto any short-term debt extension saying, “This could bring my presidency down. I will not yield on this.

If the legislature fails to raise the $14.3 trillion debt ceiling, a partial default of the Federal Government could be triggered as soon as August 2, 2011. Although heated exchanges lasted nearly 2 hours on Wednesday, the legislature failed to come to an agreement. Further disagreements and a lack of consensus of how to handle the U.S. debt crisis may cause the value of the dollar to sharply decline, a default on U.S. debt obligations and sky-rocketing interest rates.

Currently Republicans are calling for a debt-ceiling hike which must be matched dollar for dollar by spending cuts. They also refuse to budge on tax increases. Each of these suggestions has been rejected by Democrats and the Obama Whitehouse.

At the end of Wednesday’s meeting Obama was said to have expressed frustration with the Republicans and their inability to compromise, asking them to “stop posturing and catering to their bases.” Obama and some Democrats are proposing to raise taxes on the wealthiest Americans, make certain spending cuts and re-evaluate certain reforms to Medicare and Medicaid.

Opponents of Obama’s plans oppose tax hikes, citing the probability that this move would derail the feeble economic recovery. Republicans argue that taxing America’s “job creators” will not improve the employment rates.

The seriousness of the situation was reinforced on Wednesday when Federal Reserve Chairman, Ben Bernanke, testified on Capitol Hill, warning that if the U.S. failed to raise the debt ceiling the impact on the U.S. and its economy could be a major crisis and be potentially catastrophic for the global economy.

Gold prices soared Wednesday, reaching record highs, and according to CNN, a major credit rating agency confirmed they would put the sterling bond rating of the United States on review for possible downgrade citing the “rising possibility” that the U.S. Congress would not be able to raise the debt ceiling and stop the U.S. from defaulting on its debt.

Filing for Bankruptcy

The United States is faced with economic crisis and many families are feeling the pinch of high unemployment rates, job loss, a declining housing market and stagnant wage increases. If you are bankrupt and need help, there may be a solution.

Many individuals can file for bankruptcy and either discharge some of their unsecured debt or create a 3 to 5 year debt repayment plan to repay their debts.

Filing for Chapter 7 Bankruptcy will allow you to discharge most types of unsecured debt by liquidating your assets and using the money from the liquidation to pay your creditors. Chapter 13 Bankruptcy will stop home foreclosures, wage garnishments and bank account levies and will allow you to restructure your debt payments to repay your creditors over a 3 to 5 year period.

Debts are paid in priority order, according to bankruptcy law, and a trustee is assigned to your bankruptcy case to distribute payments to your creditors. Creditors are also barred from contacting you or continuing their harassing debt collection tactics while you are under bankruptcy protection.

Filing bankruptcy is a very serious financial decision which should not be made without first talking to a bankruptcy lawyer. Many debtors will not qualify for Chapter 7 Bankruptcy and must repay a portion of their debts under Chapter 13 Bankruptcy.

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