Struggling with credit card debt is stressful and confusing, but it doesn’t have to be. There are options for consolidating and eliminating your debt, including filing for Chapter 13 bankruptcy. Most clients ask, “Why choose Chapter 13 over hiring a debt consolidation company?” The answer is simple, Chapter 13 allows you to put you and your family ahead of your creditors. Let me explain.
Debt Consolidation Companies
When working with a debt consolidation company, you pay them. They set up a repayment plan and collect a percentage as payment for their services. So you’re paying off all of your debt and then some. The “and then some” you are paying the debt consolidation company adds up very quickly. Your finances are already tight, which is why you were looking for help in the form of a debt consolidation company. Why add to your stressful financial situation by entering into a debt consolidation program that increases your total debt amount?
Chapter 13 Bankruptcies
By filing for Chapter 13 bankruptcy, you work with your lawyer to set up a repayment plan and the creditors cannot harass you while you are working towards financial freedom. A repayment schedule is set up and payments are based on what you can afford. Chapter 13 is here to help you, it’s about you. After a specified period of time, 3 to 5 years based on your eligibility and qualifications, the remaining debt is wiped out, forever – tax-free.
A Chapter 13 Attorney Can Help
Still not sure? That is totally normal – the thought of filing bankruptcy scares most people, until they sit down with a chapter 13 bankruptcy attorney and walk through the advantages and disadvantages. This hypothetical situation may help you understand why a Chapter 13 bankruptcy is a viable debt solution.
Let’s say you have $50,000 in credit card debt. You set up a plan with a debt consolidation company to pay the debt off over five years (if you’re lucky). The company collects 5% as their fee for helping you. In this situation, you would be paying $875 every month for five years, whether you can afford that amount or not. That’s a total of $52,500.
Now let’s take this hypothetical debt and file for Chapter 13 bankruptcy. Again, you have $50,000 in credit card debt. You and your chapter 13 attorney have worked together to set up a payment plan of $200 each month for five years because that is all you can reasonably afford while trying to provide for your family. By the end of this time period, you will have paid $12,000, which will be allocated to your creditors according to your repayment plan. Now, what happens to the other $38,000? It’s gone, wiped out – forever; in court it is called a bankruptcy discharge. This is a legal order that eliminates your liability and prevents your creditors from attempting to collect on these debts.
So, focus on you, not your creditors. Take a minute to consider these questions:
- Would you feel less stressed tonight if you resolved your debt?
- If you could focus on your family and not the creditors, how would your life be different?
- How would a bankruptcy discharge (debt elimination) change your life?
- How would you feel if you could choose a debt solution whose monthly payments were affordable, instead of trying to scrape enough money together each month to pay the bare minimum?
Join the thousands of people that have been helped over the years get a fresh start through filing for bankruptcy. Start by doing what they did first – they talked to a chapter 13 attorney. Set up a free initial consultation to review your financial situation and walk through the outcomes of each debt solution available to you. This is the first step in getting back to financial freedom.