Debt Consolidation Or Filing Bankruptcy - Which is Better?

One of the most frequently asked questions bankruptcy attorneys will be asked by potential clients whether they need to file for bankruptcy, or use a debt consolidation company to make payments on their debts. For those debtors who needs luck to qualify for Chapter 7 (which does not repay the debt, but in most cases allows for the termination of all dischargeable debts), the decision is much easier to make. But what about those who have the ability to have to make some monthly paymentstheir creditors and do not qualify for Chapter 7?

They are used primarily in many cases, the bankruptcy option is Chapter 13, which allows a rule, a partial repayment of debt. Armed with this choice, most people decide that debt consolidation, rather than the filing of a Chapter 13 bankruptcy, your best solution. However, this is almost never true. In Chapter 13, the amount you have to your creditors must be repaid almost always less than (or, at worst, equal) towhat you have to report outside of bankruptcy. This is true even if you are asked to repay 100% of your debts in a Chapter 13 case. Depending on various factors - above all, your income and expenses - you can have a discharge of your debts in a Chapter 13 case, the recovery of 0% to 100% of unsecured debt for 36-60 months.

Why is it better to 100% recovery in a Chapter 13 rather than debt consolidation? Because you do not have to pay for interest accrualunsecured debt in Chapter 13 Even under the best consolidation typically out of bankruptcy, it will be paid interest. Even in your Chapter 13 repayment plan for a maximum of 60 months (and in many cases as little as 36 months).

This may over time be significantly less than one paid result in a debt consolidation agreement to pay. So if you are in a position where you can have too many assets or income to qualify a Chapter 7Case, however, problems in managing your monthly payments on your credit cards or other unsecured debts, you should consult with a bankruptcy attorney about the possibility of registering a chapter 13th You may very well be able to pay off all unsecured debts with affordable monthly payments in less than 5 years!