Chapter 13 vs. Debt Consolidation

Misleading ads from debt counseling and consolidation companies promise to resolve your credit card debt for pennies on the dollar. Unfortunately, most of these programs only leave consumers in greater debt after they have spent hundreds of dollars in fees. For the vast majority of consumers, the only real solution to debt problems is bankruptcy.

At the Orantes Law Firm, in Los Angeles, attorney Giovanni Orantes is dedicated to helping consumers throughout Southern California obtain relief from debt by filing bankruptcy. We offer a free initial consultation to answer your questions about debt consolidation programs and bankruptcy.

Chapter 13 bankruptcy is a debt payment plan that does everything that debt consolidation promises — and more. The following chart compares the two options:

  Chapter 13 bankruptcy Debt consolidation
Protection from creditors Federal law protects you from attempts by creditors to collect debts. No protection from creditors
Negotiating with creditors Creditors are required to accept your court-approved payment plan. Individual creditors may choose not to negotiate.
Discharge of debts Provides discharge of debt Debts are not discharged, but some creditors may agree to forgive debts
Tax consequences Discharged debt is not taxable Forgiven debt may be taxed as income
Legal ethics A bankruptcy lawyer has a legal duty to protect your interests. Debt consolidation firms are largely unregulated and do not have a legal duty to you.

If you are considering debt consolidation, you should talk to an experienced bankruptcy lawyer to explore your options before you take any steps you cannot easily undo.

Contact Los Angeles Bankruptcy Attorney Giovanni Orantes

For more information about debt consolidation vs. bankruptcy, call (213) 340-0534 or contact us by e-mail to schedule a free lawyer consultation. Se habla español.