Boston Bankruptcy Lawyer

Chapter 13 Bankruptcy

The final potential form of “debt consolidation” is not actually consolidation at all. It is actually a form of bankruptcy called Chapter 13. Chapter 13 allows a debtor to consolidate his or her debts, with approval from a bankruptcy court and the creditors, into one payment.

One of the benefits of Chapter 13 bankruptcy is that it allows the debtor to achieve lower interest rates for the length of the repayment period. This means that while all of the principal is being paid off, exorbitant interest rates will be lowered. The result is that a lower amount of money is owed.

Chapter 13 bankruptcy can be considered a drastic form of debt consolidation; however, it may be the best solution in a certain situations. It results in a manageable monthly payment that covers all debts. Some debts are paid off in full while others are discharged.

One difference between Chapter 13 bankruptcy and other debt management plans is that Chapter 13 has a negative effect on a person’s credit score. The other methods do not necessarily affect a person’s credit rating. Chapter 13 is going to cause a definite downswing in a person’s credit score. Fortunately, the credit score is likely to recover if the debtor takes important lessons from the whole process. In addition, the temporary credit score penalty is often a small price to pay for receiving a fresh financial start.

Contact a Chapter 13 Bankruptcy Lawyer

If you are considering filing for bankruptcy, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss your financial situation today.