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“The life of the law has not been logic; it has been experience.”

-Oliver Wendell Holmes, Jr.

Debt Consolidation vs. Chapter 13


If you currently are employed but struggling to make payments on your bills, then you have two options. The first is a debt consolidation program. Debt consolidation works best for total debt that is less than $5,000 and it is important to find a reputable, nonprofit credit counseling agency for assistance. If your debt exceeds $5,000 then a Chapter 13 repayment plan may be a great option for you.

 Unlike debt consolidation programs, a Chapter 13 gives you the protection of the bankruptcy laws that requires all creditors to stop contacting you, stops any pending lawsuits, lowers interest rates on credit card debt and may even lower interest rates on car loans. The bankruptcy laws may even allow you to dispose of a second or third mortgage if your home is over financed. Debt consolidation programs cannot offer these benefits and your creditors may still contact you, and even file a lawsuit against while you are making regular payments under the program. Under a Chapter 13 bankruptcy, you will make monthly payments to a trustee who will pay your creditors for you. Consult an experienced Chapter 13 attorney to decide what options are best for you.

 This content is provided for informational purposes only and is not intended as legal advice. McKenna Storer is not liable for any actions taken on the information provided and is not liable for any errors or omissions.  

Categories Bankruptcy Services

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