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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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What is the best alternative. Debt consolidation using a reputable

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What is the best alternative. Debt consolidation using a reputable company or filing chapter 7/13? Lost my job about two years ago and my salary is now only 70% of my previous income. Tried a home mod, but the institution turned me down. I need to reduce my debt with the least amount of fallout. thanks

Hi JACustomer,

There is no question that filing a Bankruptcy is preferable to debt consolidation - even if you can find a reputable company. This is because there is relatively little benefit to participating in a debt consolidation, which also has a negative impact on one's credit score.

A Chapter 7 Bankruptcy eliminates unsecured debts without having to pay anything. A Chapter 13 Bankruptcy eliminates the balance of unsecured debts after making monthly payments for 3-5 years. (Chapter 13 works similarly to debt consolidation.)

In addition to the possibility for paying less with a Bankruptcy, filing a Bankruptcy eliminates all unsecured debts. Debt consolidation rarely eliminates all debts, as there is often at least one creditor who will not participate in the program.


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Thank you!

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