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Making monthly debt more affordable via Chapter 13 bankruptcy

Many people in Washington believe that filing for bankruptcy is the end of the world. While there are several ways to reduce one's monthly payments, filing for Chapter 13 may be the best way based upon a person's unique situation. A recent article describes the various ways to consolidate debt.

The first option mentioned is a debt consolidation loan. This can be obtained by applying to a bank or credit union to borrow a sufficient amount that can pay off all of a person's existing debts. It can also simplify the payment process, and allow someone to pay one bill per month rather than keep up with many due dates. This can be a good option when the new bank loan is lower than all the debts that a person owes. However, there may be issues in obtaining a sufficiently low interest rate if a person does not have an excellent credit rating; even then, it may be difficult to achieve a rate that is lower than the collective rate a person is already paying.

The second option is debt consolidation via a credit counseling agency. The most reputable are non-profit agencies who assist consumers in consolidating bills by working with their creditors for a small monthly fee. This can work in some cases, but only if all of a person's creditors agree to the plan. There are also some limitations such as the inability for an agency to handle back mortgage payments, back IRS taxes or debts that resulted from a lawsuit.

Finally, some eligible individuals can file for debt consolidation under Chapter 13. When done correctly, it can be the most beneficial kind of consolidation as it allows someone to pay back all debts, including governmental and legal debts mentioned above. In addition, on credit card debts and the majority of other debts, someone will pay 0 percent interest. This will allow a person to pay off debts much faster than other types of debt programs.

As evidenced, this can be a challenging and complex issue to understand. Most in Washington considering forms of debt consolidation, including Chapter 13 relief, choose to seek the counsel of an attorney. Attorneys who are experienced in bankruptcy law can evaluate a client's specific situation and determine the best legal steps to take in order to help their clients to financial freedom.

Source:, "File Chapter 13 to make monthly debt payments more affordable", Raymond Bulaon, Nov. 19, 2016

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