Sacramento Bankruptcy Lawyer serving Rescue discusses debt relief strategies that may backfire unless it is affordable and maintained by the court such as in a Chapter 13 bankruptcy

Debt relief under a Chapter 13 bankruptcy has advantages that can make it the optimum choice, sometimes even a better way to handle overwhelming debt than a Chapter 7 plan.

A Chapter 13 repayment plan arranged through the court is based on your ability to pay creditors.  Also, it includes making your mortgage payment, so you can keep your house.

Of course there are other methods of handling overwhelming debt, but setting up such a plan outside of court supervision can backfire and leave you back at square one – or worse.

There’s always the possibility of negotiating a repayment plan with each of your creditors, even though it means contacting each one of them separately, explaining your situation, and telling them what you can afford to pay.

The downside of a plan like this is that it’s easy to end up agreeing to pay more than you can afford.  Once you miss payments with one, things can go from bad to worse with others as well.

Since you’ve made separate agreements with each creditor , any creditor not paid on time is able to initiate collection proceedings.

Not so with a Chapter 13 repayment plan.

A Chapter 13 repayment plan arranged through the court is based on your ability to pay, so falling behind in payments should not happen. Also, in the event you cannot make your Chapter 13 payments, you are working with the court, not your creditors, so you may be able to get back on track before your creditors can start collection actions against you.

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