| Chapter 13 Bankruptcy is a legal process that differs | | | | Chapter 13 bankruptcy to conclude, at which time all |
| from traditional debt consolidation in many important | | | | dischargeable debts are eliminated. Conversely, a |
| ways. If you are trying to decide between these | | | | more traditional consolidation could drag on indefinitely |
| two processes, this article will help you make your | | | | while you struggle with balances that remain high and |
| decision. | | | | continue to accumulate additional interest and finance |
| While a Chapter 13 bankruptcy is actually a type of | | | | charges. |
| debt consolidation, it differs from traditional debt | | | | Chapter 13 Takes No Late Fees or Interest |
| consolidation in certain important legal aspects. The | | | | With Chapter 13 bankruptcy, the payments you |
| most glaring and important difference is the power it | | | | make towards your unsecured debt will usually be |
| wields. Backing up Chapter 13 bankruptcy is the | | | | put against the principal, thus drastically shortening |
| Federal Bankruptcy Code, which can be a huge | | | | the amount of time it will take you to repay that |
| advantage when you are needing relief from debt. | | | | debt. In fact, debts that exist before filing |
| Chapter 13 Protects You Immediately | | | | bankruptcy will not accrue late fees, and in most |
| An automatic stay will lock into place as soon as you | | | | cases will be repaid free of interest, unlike the usual |
| file a Chapter 13 bankruptcy. It's in the form of a | | | | debt consolidation process. |
| Bankruptcy Court injunction which effectively stops | | | | Chapter 13 Attorneys Work For You |
| most recovery efforts that have been launched | | | | Unlike a debt consolidator, your Chapter 13 attorney |
| against you. Garnishments, repossessions, | | | | will vigorously represent only your best interests. He |
| foreclosures, creditor harassment and license | | | | has a legal and ethical obligation to do so, and must |
| suspensions will cease. Your creditors will be forced | | | | comply with his obligations as regulated by state law. |
| to stop all such actions because this injunction has | | | | Many times debt consolidation companies are |
| the legal chops to back it up. In reality it's a court | | | | privately run, and may, in fact, be sponsored by the |
| order that mere debt consolidation services cannot | | | | creditor themselves. With a Chapter 13 attorney on |
| provide. | | | | your side, you have the unique opportunity of having |
| Chapter 13 Covers Most Debt | | | | your rights backed up under strict legal requirements. |
| In Chapter 13 bankruptcy, such specific debts as tax | | | | Chapter 13 Protects Your Property |
| debt, child support arrears, car payments, and | | | | You won't be required to post any collateral in order |
| mortagage arrears can be rolled into one monthly | | | | to proceed with Chapter 13 bankruptcy if you cannot |
| payment. This is good news because the majority of | | | | afford the proposed monthly payments. Many home |
| traditional debt consolidation services allow only | | | | equity loans and traditional debt consolidation |
| specific debts in the settlement plan. Wouldn't you | | | | companies force you to risk losing your home and |
| rather have protection from every one of your | | | | your property. |
| creditors? | | | | Chapter 13 Takes Care of Your Important Debts |
| Chapter 13 Severely Reduces The Total Debt | | | | First |
| With the power of a Federal judge ordering your | | | | Most of your secured loans will be paid off first at |
| creditors to stick to the repayment plan, you may be | | | | the conclusion of a Chapter 13 bankruptcy plan. This |
| allowed to pay as little a 10% of any unsecured | | | | includes such things as mortgage and automobile |
| debts. Of course there are certain qualifications you | | | | payment defaults. Unsecured debt payments such as |
| must meet. If you can meet these qualifications the | | | | credit cards and medical bills are taken care of after |
| other 90% will be eliminated. You'll be able to pay off | | | | secured and other important claims have been paid. |
| your debts much more quickly because of the | | | | You will probably incur penalty charges under a |
| severe reduction in principal owed. This is something | | | | normal debt consolidation company in return for |
| that traditional debt consolidation plans cannot do. | | | | delaying payments to unsecured creditors. These |
| They can only ask the creditor to lower the interest | | | | companies also give preferential consideration to |
| rates and reduce the balances owing. | | | | home finance companies and car payments, which |
| Chapter 13 Bankruptcies Don't Drag On | | | | leaves little for the remaining claims. The bigger the |
| You'll only have to wait between 3 and 5 years for | | | | balance owing, the bigger the penalty charges. |