Debt Consolidation OR Chapter 13 Bankruptcy Reorganization: Which One is Best for You?

Debt Consolidation OR Chapter 13 bankruptcy reorganization: Which One is Best For You? Get Your Answers here.

When it comes to managing debt, there are a variety of options available to individuals and households. Two of the most commonly considered options are debt consolidation and Chapter 13 bankruptcy. Both of these options have the potential to provide significant relief from the stress of overwhelming debt, but the best choice for you will depend on a variety of factors, including your current financial situation and your long-term goals.

What is Debt Consolidation?

Debt consolidation is a process where multiple unsecured debts, such as credit card balances, personal loans, and medical bills, are combined into a single, larger loan. The idea behind debt consolidation is to simplify debt repayment by giving you a single monthly payment to make, rather than having to keep track of multiple payments with different due dates and interest rates.

Debt consolidation can be done through a variety of methods, including balance transfer credit cards, personal loans, and home equity loans. Some debt consolidation companies also offer debt management plans, which can help you negotiate lower interest rates and lower monthly payments with your creditors.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a form of bankruptcy that allows individuals and households to repay their debts over a period of three to five years. During this time, a court-appointed trustee will oversee the repayment of your debts, and your creditors will be prevented from taking any further action against you.

Chapter 13 bankruptcy is different from Chapter 7 bankruptcy in that it does not involve the liquidation of your assets. Instead, Chapter 13 bankruptcy is designed to allow you to keep your property, such as your home and car, while you repay your debts.

Factors to Consider When Choosing Between Debt Consolidation and Chapter 13 Bankruptcy

When deciding between debt consolidation and Chapter 13 bankruptcy, there are several factors to consider as we will discuss below. However, there is an obvious place you should start when considering your options:

First: Meet with an experienced bankruptcy lawyer.  A bankruptcy lawyer should be your first call, not your last. The reason? Most bankruptcy lawyers provide a free initial consultation in person or by Zoom. A bankruptcy lawyer will give you a range of options based on actual law and the real World.

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We also offer a free initial consultation by Zoom or in Person. Now, you can live anywhere and hire the best lawyer for you.

Second: You need to decide if you are comfortable having a “business” in a different State that has “representatives” that you cannot meet with in person “try” to help negotiate a payment structure concerning your creditors.

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Is Chapter 13 the best for everyone? Clearly not. Is Debt Consolidation best for everyone? Likewise, the answer is No.

Each person needs to explore all of their options and choose the path to financial relief that best meets their goals.

The following are the main factors we look at when evaluating whether a Chapter 13 reorganization is best for them or if someone should pursue other ways to handle their current financial situation.

These include:

• Your current debt-to-income ratio: If your debt-to-income ratio is relatively low, debt consolidation may be a viable option for you. However, if your debt-to-income ratio is high, Chapter 13 bankruptcy may be a better choice, as it will allow you to repay your debts over a longer period of time.

• Is there a current lawsuit filed against you? If a creditor gets a judgment against you, the creditor can garnish 25% of your Gross Wage and place a judgment lien on your house.

• The type of debts you have: If you have a lot of unsecured debts, such as credit card balances and personal loans, debt consolidation may be a good option for you. However, if you have a lot of secured debts, such as a mortgage or car loan, Chapter 13 bankruptcy may be a better choice, as it will allow you to keep your property while you repay your debts.

• Your long-term financial goals: If you are looking to get out of debt as quickly, a Chapter 7 bankruptcy may be the way to go. However, if you are looking for a long-term solution to your debt problems, Chapter 13 bankruptcy may be a better choice, as it will allow you to repay your debts over a longer period of time and keep assets such as cars, motor homes and houses.

Conclusion

Both debt consolidation and Chapter 13 bankruptcy have the potential to provide significant relief from the stress of overwhelming debt. The best choice for you will depend on your current financial situation, the type of debts you have, and your long-term financial goals.

If you would like more information, please visit our website by clicking this link: Law Offices of Christopher A. Benson, PLLC.

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Law Offices of Christopher A. Benson, PLLC

1814 S. 324th Pl. Suite B

Federal Way, WA 98003

www.cbenson.com

(253) 815-6940