Aurora Bankruptcy Attorney On Stopping A Consolidation Program

As an Aurora bankruptcy attorney, I am often asked, if I’m currently in a debt-consolidation program, am I able to stop that program and file Chapter 13?  You definitely have the ability to stop any kind of debt repayment plan or bill consolidation payment outside of a Chapter 13 Bankruptcy scenario and turn that into a Chapter 13 filing.  Many of the clients that I see for Chapter 13 have made efforts under bill consolidation that were unsuccessful.  In many cases, people have paid thousands of dollars over a course of several months, and they have not seen significant reductions in their balances.  In some cases, some creditors even proceed to lawsuit, to garnishment, to attachments, even though the debtor is making an effort to repay the debt.  

The problem with debt consolidation is that creditors to not have to abide by the repayment plan.  Some creditors will abide and others will not.  The ones that do not abide have the ability to continue to file suit, garnish wages, attach bank accounts, and take any other collection efforts provided for under law.  

Once a debtor feels that debt consolidation is not working out for them, they have the ability to hire a bankruptcy attorney and file under Chapter 13.  Chapter 13 will make a big difference in their lives as compared to debt consolidation.  Under Chapter 13, the automatic stay kicks in, and creditors cannot take collection actions.  Further, the interest can often be reduced on the amount that’s paid back through a Chapter 13 plan.  If you are someone who is struggling in a debt consolidation program or other kind of non-bankruptcy payment plan, you do have the federal right to file a Chapter 13, provided that you qualify.  I suggest that you meet with at least three qualified Chapter 13 bankruptcy attorneys to get their take on your particular fact situation.  

You might just find that repaying creditors through Chapter 13 is the best thing you ever did.  You have the ability to pay less than 100 percent back in many cases, and you hold off creditors from all types of collection activity while you are in your repayment status.