There are thousands of debtors using services designed to consolidate all of their debts together into a single ‘low monthly payment.’ The problem that comes with these services is the cost. Instead of dealing with the debt directly these services extend the period of the debt, increasing the interest rate. While the monthly payments are lower the overall amount that you will need to pay back increases dramatically. And for all the ‘working with your creditors’ that these services do, the fact is that most of your creditors are fine with this approach as it increases their total cash acquisition.
Chapter 13 bankruptcy gives you the same results as any debt consolidation services with added bonuses. Although you receive a black mark on your credit history for the next seven years you receive protection from creditor harassment, you may be able strip back any secondary mortgages If your home is underwater, and you may even be in a position to modify your car loan if that too is in default.
In the end if you file bankruptcy under chapter 13 you will receive a monthly, interest-free repayment plan that allows you to repay a portion of your total debt over a three to five year period and then have your debts eliminated. Completing this plan as scheduled can even help you improve your credit history long term, or at least get you started on the right track. If you are looking for debt consolidation talk to a professional bankruptcy lawyer who can solve the root cause of your debt and get you to economic freedom without increased interest or cost.