The Law Office of Richard S. Feinsilver
A New York Bankruptcy Law Firm
Debt Consolidation vs. Chapter 13
Are you bombarded by advertisements from so-called Debt Consolidation companies alleging that they can assist you? Most of these advertisements sound promising on the surface, and while some companies provide valuable services, but did you know that...
Debt Consolidation companies are actually telling you - indirectly - to intentionally damage your credit. They represent that they will begin to contact your creditors immediately, and begin to work out payment arrangements, but in actuality, in many instances, you are still being dunned by your creditors and collection agents and remain at risk of having litigation commenced against you and/or the enforcements of judgments that may have already been entered against you!!
Many creditors do not discuss work out payment arrangements with consumers who pay on time. In many instances, creditors will not even begin to consider adjusting payment terms in any manner whatsoever until an account is at least 60-90 days behind.
Debt Consolidation companies are only interested in collecting their fees. Many Debt Consolidation Companies will ask you to immediately begin to remit monthly payments to them. These payments are not going to your creditors!! Debt Consolidation companies "front end load" their fees so they ensure that they get paid regardless of whether or not they produce any results!!
Many Debt Consolidation companies and Not-For-Profit Credit Counseling Agencies are paid by the credit card companies for the money that they collect on your behalf in addition to the fees that you are already paying them
Although many companies do not directly disclose it directly in their advertising, there is no guarantee that all of your creditors will deal with Debt Consolidation companies. From the onset, there are numerous creditors that absolutely will not deal with Debt Consolidation companies.
Debt Consolidation Companies may not even be able to lower your payments at all, and in fact, may ask you to pay a higher amount!!
Why Chapter 13 Bankruptcy Is Better Than Debt Consolidation in New York
Although Chapter 13 bankruptcy is primarily used by homeowners to deal with mortgage and auto payment arrears, a Chapter 13 bankruptcy is also a valuable tool to deal with the debts of individuals who have the ability to repay a portion, or even all of their debt. A Chapter 13 bankruptcy allows an individual to pay their debt over a three to five year period with NO ADDITIONAL ACCRUED INTEREST.
Using Chapter 13 bankruptcy as a pure Debt Consolidation tool is fairly straight forward. Chapter 13 bankruptcy can be viewed as personal reorganization. In a Chapter 13 proceeding, you deal with ALL of your debt obligations at once. Bankruptcy is not a "pick and choose" process. The law requires you to deal with all of your creditors and your creditors must deal with you.
Creditors have no choice when you file for Chapter 13. They must comply with the requirements of the law. In Chapter 13 bankruptcy, your repayment plan is not based upon what the creditors want or may be willing to accept. Your monthly payment shall be based on what your individual circumstances allow you to safely afford within the guidelines set down in the Federal Bankruptcy law. This amount is determined by the Means Test.
The Means Test has been designed to determine what may be a fair and reasonable amount to be repaid to your creditors based upon income and expense guidelines based the size of your household and where you reside. Please contact our offices for additional information about the Means Test or click on our overview of the Means Test in the FAQ Section of our website.
When you deal with a Debt Consolidation company, you are not in control of your situation. You are handing off your financial difficulties to an unknown third party and are blindly following their lead - many times to uncertain or negative results.
In Chapter 13 bankruptcy, you are in control of your financial situation. The filing of a Chapter 13 bankruptcy case is purely voluntary. You are actually proposing your own repayment plan within the guidelines set down in the law. So long as the plan of repayment that you propose is in compliance with the Bankruptcy Code - your creditors have no choice and must accept the repayment terms that you have proposed.
If you live in New York's Kings (Brooklyn), Queens, Nassau, or Suffolk (Long Island) counties, and need the advice of an experienced bankruptcy attorney, contact the Law Office of Richard S. Feinsilver. Our bankruptcy attorneys can help you determine if a Chapter 13 bankruptcy filing is right for you. Don't let a growing mountain of debt keep you from achieving your life's goals.
