Question: How does filing a Chapter 13 Bankruptcy compare to Debt Consolidation and Debt Resolution? 

Don’s Answer: 

Chapter 13 is payments based on your “disposable income”, which if it is not much right now, and it will get rid of all the card and loan debts–all debts except the house and cars essentially, and creditors absolutely have to leave you alone.

Debt Consolidation is when you borrow enough money to pay all of the cards and still have a really big bill. 

Debt Resolution is when you pay an outfit — National Debt Relief, Beyond, Blue, etc a set amount each month, and “We will negotiate a reduced amount that you owe; we will accumulate your money until there is enough to satisfy the first debt, then go to the next one”. They often do the small ones first, so they can tell you “We got rid of Capital One! Now we will start on the next one.” I had a client that paid $600 a month for three years. Then she got garnished on her wages. She called the company and said “I’m paying you $600 a month and they can still garnish my wages?”  Their response? “Well, yes, there was not enough in your account to pay that one off, and they refused to wait, so yes, you need to continue to pay us so we can finish the others”. She did not have enough left to live when paying them $600 and having her wages garnished, so she had me file a bankruptcy for her.

I assume some of the Debt Resolution plans work. I see the ones that fail, and there are a lot that fail.