Making the decision to file bankruptcy does not come easy. In most cases the financial burden being faced by the consumer has been ongoing for quite some time. It is also not uncommon for the debtor to have tried repeatedly to get out of the overwhelming debt they are facing. Bankruptcy may seem like a last resort, or an attempt to take out a consolidation loan may have been attempted. The thought of having one monthly payment that covers all your obligations is tempting, but the type of consolidation you agree to does matter.
There are countless companies offering debt consolidation, but there is also a bankruptcy option that may reach more desirable results. A Chapter 13 bankruptcy acts like a debt consolidation, but with some important differences:
- A Chapter 13 case is a bankruptcy, and will appear as such on your credit.
- A Chapter 13 bankruptcy case will consolidate your debt into a plan of repayment, which will be approved by the Court and administered by the Chapter 13 Trustee.
A debt consolidation is not a bankruptcy and may not effectively handle all of your debt. Your creditors are not obligated to participate in or agree to the terms of repayment offered by a consolidation company, but are required to follow the rules of the bankruptcy court. Bankruptcy also offers the protection of the automatic stay, which prohibits creditors from trying to collect debt from you. While the two programs have some similarities, the peace of mind you get from knowing your debts are reduced with the blessing of a Judge only comes from filing a Chapter 13. For more information and help on making a decision that works best for your budget, call our office.
If you have questions about bankruptcy and what choice is best for you, call a knowledge bankruptcy attorney for answers. Call a Bloomington, Minnesota bankruptcy attorney and schedule an appointment today.