If you are thinking about getting a debt consolidation loan because you feel that it could enable you to simplify your finances and get out of debt, you are not alone. Many Americans are turning to debt consolidation programs or loans to try to manage their debts. The idea behind a debt consolidation loan is that the debtor can pay one payment each month instead of many, in addition to paying a lower total amount per month than they had previously been paying on their debts.

Sometimes, debt management loans or programs do enable debtors to rebuild their finances. However, at other times, they stretch on for years without effectively reducing the balances on the consolidated debts. There are also debt consolidation scams out there. If you are thinking about getting a debt consolidation loan or entering into a debt management program, you may also want to consider whether there is an alternative course of action that could help simplify your finances and manage your debt.

Filing for bankruptcy under Chapter 13 may be the alternative that you are looking for. A Chapter 13 bankruptcy could allow you to reorganize your finances, keep the things that are most important to you, and more. The process is safe, because bankruptcy proceedings are supervised by the United States Bankruptcy Court. As a part of a Chapter 13 bankruptcy, the debtor makes a plan to pay their debts over three to five years, which is a shorter time frame than most debt consolidation programs or loans. With a Chapter 13 bankruptcy reorganization plan, debtors make only one monthly payment, just like with a debt consolidation plan.

If a debtor is diligent about making their monthly payments for the entire term of their Chapter 13 bankruptcy plan, any remaining balances on some or all of their debts will be discharged at the end of the plan. While some debts are dischargeable through Chapter 13 bankruptcy and some are not, it is important to note that traditional debt management programs do not eliminate any debts that are not fully paid. The ability to eliminate some debts after paying only a fraction of the original balance is one of the most important benefits of filing for bankruptcy under Chapter 13.

There are also other benefits to filing for bankruptcy under Chapter 13. As part of the bankruptcy proceedings, creditors are prohibited from contacting the debtor. This provision is called the “automatic stay”, and it provides welcome relief from harassing phone calls and threatening letters. Also, unlike many debt consolidation loans, debtors do not have to pledge their homes, cars, or any other collateral. With a Chapter 13 bankruptcy, a debtor can structure their payment plan so that they may keep those items.

To learn more about whether filing for Chapter 13 bankruptcy is right for you consult with experienced Kansas City Bankruptcy Attorney Douglas Breyfogle. He has twenty years of experience helping clients get out of debt, and he may be able to help you. To learn more, please contact our office today, at (913) 742-8700 to schedule a free and completely confidential initial consultation.