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Chapter 13's advantages over Debt Management Programs

If you're pondering whether to utilize a Debt management Program (DMP) or file for CHapter 13 bankruptcy, consider the following:

Many credit-counseling agencies have pre-arranged terms with credit card companies for repayment. The interest rate may be reduced, but there will still be interest to pay.

Filing for Chapter 13 bankruptcy enables the debtor to pay off debts with zero percent interest and provides a legal means to eliminate debt. Income left over after a reasonable family expenses goes toward paying off your debts. Anything you can't be paid will be eliminated or discharged. 

DMP's are dependent upon all creditors agreeing to the plan. If just one balks, it may throw a monkey wrench into the whole plan.

Creditors have no influence on a Chapter 13 filing. These filings are approved by a court of law. 

Most DMPs establish a budget and monthly payment amount. By the time arrangements are worked out with creditors, you might wind up having reports of late payment going to the credit rating agencies, tarnishing your credit. Some creditors may seek wage garnishment to speed up repayment. If they succeed, other important budget items may suffer.

Chapter 13 protects you from wage garnishments and from late reporitng to credit-rating agencies. Terms of repayment are worked out between your attorney and the bankruptcy court.

DMP creditor arrangements are voluntary and rely on the good faith of the creditors, who are free to change the rules in the middle of the game.

Chapter 13 provides a consistent set of rules and legal protection from all creditors. Harassing phone calls and letters, vehicle repossession, home foreclosure, and utility shutoffs are all off limits.

Chapter 13 is a tool to help someone regain secure financial footing, not a sign of financial failure. Call The Law Office of William J. Luse at 843-939-4795 so that we can go over your options.


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