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Why is filing for Chapter 13 bankruptcy preferable to hiring a private debt consolidation firm?

Unlike bankruptcy judges, private debt consolidation firms do not have judicial authority, and so they have no legal powers over any of the debtor’s creditors. For example, a court imposes an automatic stay on creditors, which prevents them from continuing or starting any debt collection measures against the debtor. A private firm can not impose a stay because it has no power to limit the actions of creditors. Similarly, a court can make creditors accept partial payment as full payment, while a private firm can not force creditors to take a loss on their loans.

Barry Rosenzweig
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Barry Rosenzweig, has 25 years experience as an attorney helping clients solve their legal problems.