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One of the most frequent questions personal bankruptcy attorneys are asked by potential clients is if they should file bankruptcy, or use a debt consolidation company to make payments towards their liabilities. But what about people who have the facility to make some regular payments to their creditors and don't qualify for chapter 7?

Their first bankruptcy option in several cases is Chapter thirteen, which allows for, usually, a partial repayment of the debt. Fitted out with this choice, most people decide that debt consolidation, rather than filing a Chapter 13 bankruptcy case, is their perfect solution. However, this is kind of never true. In Chapter thirteen, the amount you should repay to repay to your creditors creditors will always be less than ( or, at worst, equal) to what you will have to reimburse outside of bankruptcy. This is true even if you are required to repay one hundred percent of your debts in a Chapter 13 case.

Why is it better to reimburse 100 percent in a Chapter 13 rather than doing debt consolidation? Because you do not have to pay for interest increase on unsecured debts in a Chapter 13. Even under the best consolidation deal outside of bankruptcy there is going to be interest paid.

This can result in significantly less paid out over time than one would have to pay in a debt consolidation arrangement. So if you are in a position where you will have too many assets or earnings to be accepted for a Chapter 7 case, but are having difficulty handling your regular payments on your credit cards or other unsecured loans, you must check with a bankruptcy solicitor about the chance a Chapter 13 case. You very well may be ready to pay off all your unsecured borrowing with cheap regular payments in less than 5 years!
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