If you are behind on your bills and under an enormous cloud of debt you may have thought seriously about the differences between filing a chapter 13 bankruptcy vs. debt consolidation. Today we are here to discuss why bankruptcy may be the best choice for you.
Bankruptcy not only gives you a better chance at getting debt free faster, it also provides you with classes to take to better your financial situation. You will be required to attend credit counseling and debtor education classes which will give you a better understanding of how to budget yourself, and hopefully stop the same situation from happening again.
Advantages of Ch. 13 Bk vs. Debt Consolidation
Although a chapter 13 bankruptcy is essentially consolidating your debt it has the Federal Bankruptcy Code behind it and provides many advantages.
- The Automatic Stay: When declaring bankruptcy you are immediately protected from your creditors by this Bankruptcy Court injunction. The stay has the power to stop foreclosures, repossessions, garnishments, and creditor harassment.
- Most debts are included: Most debt consolidation agencies will not include debts such has your mortgage or loan. In bankruptcy you are able to include all unsecured debts, along with some secured debts aside from student loans and court appointed expenses.
- Lower amount of debt: Chapter 13 bankruptcies generally allows you to pay as little as 10% of your debt back the credit while eliminating the other 90%, where as in debt consolidation your creditors are just asked to reduce the interest rate or balance.
- Protects property: When you file for bankruptcy protection you’re offered ways to protect your property, and the equity you have in that property. You are not required to post any collateral and your house or car will not be taken if you cannot afford your payments.
Getting Credit after Bankruptcy
Bankruptcy also gives you better advantages after discharge. Getting a new line of credit such as a car loan after bankruptcy will be a lot easier because you are now debt free. To see how much you could qualify for see submit our free and easy application. You can use our bankruptcy auto loan calculator to see how much your monthly payments would be.
Remember we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.