You can use bankruptcy for debt consolidation like payments for credit card and medical debts. There are many debt consolidation companies, and a lot of them will rip you off. However, you can use chapter 13 bankruptcy as a debt consolidation without the fear of being ripped off by a dishonest company. As an added bonus, you can probably reduce the amount you owe on debts like credit cards and medical bills by a substantial amount without having to bargain with your creditors, though this is different in each case.
If your debt problems are only unsecured debts like credit card and medical bills, you could eliminate those debts with a chapter 7 bankruptcy. However, chapter 7 has income limits. Because of the very high cost of living in the Bay Area, many people who come to me for help now make too much money to file chapter 7. If you make too much money for chapter 7 bankruptcy, then chapter 13 bankruptcy would work as a debt consolidation without you having to worry about getting ripped off.
In addition to eliminating the fear of being ripped off by a dishonest debt consolidation company, consolidating your debts in a chapter 13 bankruptcy gives you legal protections that a private debt consolidation does not. The money that you pay to private debt consolidators is not paid to creditors until the debt consolidators collect enough money to bargain with your creditors, so your creditors have no idea that you are paying money for your debts to them and often sue during the debt consolidation process. Once you file bankruptcy, your creditors are legally prohibited from taking any collection actions against you, including writing, calling, or suing you, or even proceeding with a lawsuit that had already been filed before you filed bankruptcy. Private debt consolidation provides none of these protections, and some of my clients had been sued by creditors while they were in private debt consolidation programs.
In a chapter 13 bankruptcy you will have up to five years to pay off your debts, and you may be able to substantially lower the amount that you owe. You would make one monthly payment to the chapter 13 trustee, who will pay your creditors the percentage to which they are entitled under bankruptcy law. When you are finished paying after five years, all of your dischargeable debts like credit card and
medical debts will be eliminated.
If you are considering a debt consolidation, contact a chapter 13 bankruptcy attorney today. You will get the benefits of debt consolidation without the worries about being ripped off or sued.