Four Reasons A Chapter 13 Bankruptcy Is Preferable To Debt Consolidation
You may have seen commercials or read advertisements about debt consolidation, and the companies behind these programs will make all sorts of claims about what they can do for you. However, a Chapter 13 bankruptcy is also debt consolidation, and there are many advantages to it versus debt consolidation programs. The following are four of them.
There is no negotiation about your debt
With many debt consolidation companies, they will claim that they can negotiate with your creditors to bring down your interest rates and even the principle of your debt. It is possible that they can do a little for you, perhaps in the area of late fees that have been tacked onto your account balance. But this is little in comparison to what a bankruptcy judge can do. Bankruptcy laws give these federal judges the ability to reduce your debt in accordance with your ability to pay it back.
There are more debts that can be consolidated
Once you look into the specifics of what a debt consolidation program offers, you will quickly learn that it usually focuses on unsecured debt, specifically credit card debt. A Chapter 13 bankruptcy can cover a much greater range of debts, including mortgages, car loans, and even some types of taxes that are owed. Although it is true that there are some debts that are not covered by a bankruptcy filing, the types of debt that are covered go far beyond anything a deb consolidation company will address.
A Chapter 13 bankruptcy has a specific end date
Once you have made all of your payments, your bankruptcy will be discharged, and you will be through with it. Debt consolidation programs can seemingly go on forever. The goal is to consolidate your credit card debts into a single payment. But like any credit card, making minimum payments can mean making minimal progress on your debt. You're simply trading many creditors for a single creditor.
You have an attorney on your side
Of course, this assumes you don't attempt to file for bankruptcy yourself; this is a bad idea. Your creditors are entitled to as much money as you can pay back, but there are some assets that you may have that can be protected. An attorney can explain to you every area of the law that applies to your situation and defend you against any challenges to your bankruptcy by your creditors.
Debt consolidation plans may sound great, but the advantages of going through a bankruptcy court for debt consolidation, in the form of a Chapter 13 filing, with an attorney, is usually a better choice. At the very least, you can seek out a free consultation with a bankruptcy attorney about your particular financial situation. To learn more about bankruptcy, visit a website like http://timgeorgelaw.com