Why Chapter 13 Bankruptcy Trumps Debt Consolidation Skip to main content

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Why Chapter 13 Bankruptcy Trumps Debt Consolidation


You may already understand some of the dangers of debt settlement: the fact that Americans rarely emerge from debt settlement programs with their credit card balances eliminated; the fact that many wind up worse off than when they started their consolidation; and that many emerge from these plans with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors.

But, you may be wondering, why is bankruptcy any better than debt consolidation?

Well, it turns out there are many reasons.

While debt consolidation and settlement firms have done a great job at selling their side of the bankruptcy alternative story, Chapter 13 bankruptcy needs no sales pitch. In the majority of cases, Chapter 13 completely eliminates your debt, without you having to pay a dime to your unsecured creditors. What's more, Chapter 13 will allow you to get current on your secured debt, like your mortgage and car payment. There is no debt consolidation or settlement company in the world who can do the same.

Not convinced? Here’s more to make you understand the benefits of bankruptcy:

Bankruptcy is Backed by the Power of the Federal Law

Personal bankruptcies like Chapter 13 are enforced by the Federal Bankruptcy Code. The rule of law. The final word in your bankruptcy filing and others. Debt consolidation firms have no such infrastructure to enforce the legality of their sometimes haphazard and loosely constructed payment plans. They cannot force creditors to cease harassing you, stop them from taking your home or your car, or reduce, forgive or consolidate your debt. Yet when an average American just like you files for Chapter 13 bankruptcy, creditors have no choice: they must automatically “stay” their phone calls, letters, and repossessions and comply with the specific orders of the bankruptcy trustee and judge to accept what you can give.

Bankruptcy is the Comprehensive Choice
Think your debt consolidation will include everything you need to get back on financial track? Wrong. Debt consolidation companies don’t cover things like tax debts, child support or debts such as speeding tickets. While these categories of debt are generally non-dischargeable, a Chapter 13 bankruptcy allows you to repay these debts over time. At the same time, while you repay these non-dischargeable debts through your Chapter 13 plan, your unsecured credit card debt is simply eliminated.  


Bankruptcy Cures Biggest Creditor Woes
As mentioned, bankruptcy is like garlic to vampiric creditors waiting to harass you with late night calls, harassing letters and litigious dispositions. Debt consolidation may leave you high and dry with no legal backing to back up creditor claims against you.

In the alternative, Chapter 13 bankruptcy not only prohibits creditors from contacting you, but imparts severe penalties in the form of sanctions if they violate judge’s orders.

Bankruptcy Gets You a Much-Deserved Debt Discharge
Debt consolidation or settlement plans leave no room for any sort of debt discharge. If some of your creditors don't agree to settle with you, you could get sued. Bankruptcy forces creditors to accept your Chapter 13 bankruptcy plan. Once you complete the plan, your debt is extinguished, often without you having to pay a dime to unsecured creditors. Try that with a debt consolidation firm.

So think twice before contacting a debt consolidation or settlement company. Knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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