How does a chapter 13 bankruptcy differ from a private debt consolidation service?

In a chapter 13 case, the bankruptcy court can provide relief to the debtor that a private debt consolidation service cannot provide. For example, the court has the authority to prohibit creditors from attaching, foreclosing or garnishing the debtor’s property. Also, the court can force certain unsecured creditors, like credit card companies, to accept a chapter 13 plan that only pays a portion of the debt. The remaining unpaid portion of the debt can be wiped out altogether by the bankruptcy discharge. The court can also require certain secured creditors to accept lower interest rates. A good example of this is on a car loan. A creditor may have a contract that calls for a 25% rate of interest. A chapter 13 plan can offer a substantially lower rate and, if approved by the court, the creditor must accept the lower rate. In a private debt consolidation, a debtor is still left at the mercy of his or her creditors. Not so in a chapter 13 case. For more information on why a chapter 13 might be a better alternative than private debt consolidation, call attorney Josh Mitchell with the law firm of Bouloukos, Oglesby and Mitchell.