We all know what bankruptcy is, and a number of companies and firms deal in debt settlement plan to avoid using the bankruptcy chapters. Though people, in fear of getting into bankruptcy procedure, use the settlement plans, they do not know what exactly they are. A debt settlement plan has a number of folds to it and you might be falling for something you do not want and thus it is better to know what it is. These plans are basically debt relief options formulated to assist in paying of the large accumulated debts, which are not being paid. A number of debt settlement plans are based on false promises which companies make to lure in people who are in need and make some good out money out of the problem. This is why, usually experts advise people to go for chapter 13 bankruptcy rather than a settlement plan, and mentioned below are a few convincing reasons as to why you should choose Chapter 13.
Non Taxable Debt Forgiveness
This is one of the biggest advantages of going in favour of filing a bankruptcy. A person who is going to the extent of filing a bankruptcy is in dire need of money and is not looking forward to paying commissions or taxes at this moment. When you file a bankruptcy the debts which are forgiven do not bring in the requirement of payment of taxes with them. This makes your burden a little less, compared to debt consolidation plans.
Problem of Multi-Creditors Solved
With Chapter 13 bankruptcy filed, you do not have to deal with end number of creditors and suffer the mental brunt time and again. This is because once the court takes the matter, you get much more power as now you can devise your own payment plan keeping in mind your situation and now you have to convince the judge and the Chapter 13 trustee. Once this works out you do not have to worry about constantly engaging with your creditors, which is usually the case when you opt for debt consolidation and settlement plans.
Negative Credit Scores
A good credit score is very important for your finances and money matters, and once you opt for debt consolidation or debt settlement plans it is likely to go low. This is because you can pay the credit cards properly once the creditors agree to settle accounts. Also, if you take a long time to pay debts through one of these programs, it in turn hits your credit score.
There are other advantages too, of bankruptcy plans which debtors do not know, like being able to get rid of the second mortgage with the help of Chapter 13, and being able to modify car loans as well. On top of that, the companies which deal in settlement plans use the emotional factor coupled with a number of myths regarding bankruptcy, to make people fall for their plans, and in the end the debtors end up paying much more than what they were initially supposed to pay. This is why going for Chapter 13 is a better bet compared to debt consolidation plans.
This post is shared by Attorneyforbankruptcy.com, which a leading law firm of California. Here you can have detailed information on california chapter 13 bankruptcy attorney and also can hire bankruptcy lawyer san jose.