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Debt Consolidation or Chapter 13 Payment Plan?
I wish I could put you in touch with any of the dozens of people who have come in for a free bankruptcy consultation in Fort Lauderdale after paying a consolidation company for months. Without fail, they all had the same experience even thought hey used different debt consolidation companies. Here’s how it goes: You sign up with a debt consolidation company and they tell you they can settle your debt for pennies on the dollar. They charge probably as much as a Chapter 13 bankruptcy will cost and they tell you to stop paying your credit cards and start paying them. They will put your money in a separate account and once they have enough money, they will make settlement offers to your creditors. They insinuate that they have agreements with credit card companies to settle your debts and they may even tell you that credit card companies support their efforts and help fund them. THAT should be your first clue that you have walked into the lion’s den to get a plan to slay the lion.
A Chapter 13 Bankruptcy is an Affordable Debt Consolidation Plan That Creditors Must Accept! You Have The Power to pay Them What You Can Afford – Not What They Want.
Here’s what they didn’t tell you and why everyone ends up in a Plantation bankruptcy attorney’s office after paying for about a year:
| Chapter 13 Bankruptcy | Debt Consolidation Plan | |
|---|---|---|
| Protection from creditor law suits | The Bankruptcy Automatic Stay protects you from your creditors. They cannot take any collection activity once you file bankruptcy. | No protection from your credit card creditors. Nothing stops them from suing you (and they do). A lawsuit is usually the reason people come in to find out about bankruptcy. |
| Negotiating with creditors | No negotiating here. Creditors are required to accept your court-approved payment plan. | Credit card companies have the upper hand in negotiations. They are not required to accept what you can afford to pay. You usually pay what they want you to pay which is usually a pretty high amount. |
| Monthly Payment | Your monthly payment is based on what you can afford to pay. It doesn’t matter how much you owe. | Monthly payment is based on a percentage of what you owe – not what you can afford to pay. Creditors do not have to accept what you can afford. |
| Complete Debt Elimination | Provides complete elimination of credit card debt once your complete your Chapter 13 payment plan. | You’re not told that some creditors do not participate in these programs and won’t settle the debt. They will sue you. Not only is your debt not eliminated – it’s usually bigger by the time you realize this. |
| Tax Bill Consequences | Discharged debt that is eliminated in bankruptcy is not taxable | You can bet that you will receive a 1098 in the mail. Forgiven debt is usually reported to the IRS as income that you pay taxes on. |
| Who do they work for? | A bankruptcy lawyer has a legal duty to protect your interests. We’re fighting for you, not creditors. | Some debt consolidation companies are funded by credit card companies and none of them have a legal duty to act in your best interests. And they don’t. |
| Fees | Our attorney fees are worked into your affordable payment plan. | Did they tell you that they will pay themselves first before putting a dime aside for your credit card debt? By the time people usually realize they can’t pay the high monthly payment and ask for a refund – there is no money to refund because they paid themselves first and it takes about a year to pay them. |
| Impact To Credit | Your credit score takes an initial hit and then starts to rebuild immediately. By the time you are done with your payment plan, your credit should be looking a lot better! | Delinquent accounts stay on your credit report for 7 years from the date of the last missed payment. Think about it…every month, you are missing a payment while you are paying the high monthly payment. If you are in a 2-3 year debt consolidation plan – your credit will keep going down and will not begin to rebuild for years after the LAST settle debt.. |
Before you enter into a debt consolidation plan, please make an appointment to speak to our experienced bankruptcy attorney. If you are thinking about debt consolidation, you should explore your options before losing money to a debt consolidation company.
Contact Fort Lauderdale Bankruptcy Attorney Orfelia M. Mayor
Call us and schedule a free bankruptcy consultation before you agree to a debt consolidation plan. You’ll save yourself months of high monthly payments and the shock of the lawsuit! We will be happy to explain the difference and the similarities between debt consolidation vs. bankruptcy,