Debt Settlement or Chapter 13, Which is Better?

At the Liviakis Law Firm, we frequently assist clients in understanding the benefits of Chapter 13 bankruptcy compared to debt settlement. Here are ten reasons why Chapter 13 bankruptcy may be a better option:

1. Legal Protection

Chapter 13 bankruptcy provides legal protection from creditors. Once you file, they cannot engage in collection efforts, providing peace of mind.

2. Comprehensive Debt Solution

Unlike debt settlement, which often only addresses unsecured debt, Chapter 13 can also deal with secured debt, including mortgages and car loans.

3. Predictable Payment Plan

Chapter 13 bankruptcy involves a structured repayment plan that is based on your income and expenses, making it a predictable and manageable solution.

4. No Tax Consequences

Debt forgiven through debt settlement is often considered taxable income, whereas debts discharged in Chapter 13 bankruptcy are not.

5. Protection of Assets

Chapter 13 bankruptcy allows you to keep your assets, such as your home and car, while you pay off your debt.

6. Lower Interest Rates

Chapter 13 can often reduce the interest rates on your debts, potentially saving you thousands of dollars over the life of your repayment plan.

7. End to Wage Garnishment

Filing for Chapter 13 bankruptcy immediately stops wage garnishment, allowing you to take home your full paycheck.

8. Credit Score Rebuilding

While bankruptcy does impact your credit score, consistent payments in a Chapter 13 plan can help rebuild it over time.

9. Flexibility

Chapter 13 bankruptcy plans can be modified if your financial situation changes, providing flexibility that debt settlement does not offer.

10. Fresh Start

Finally, Chapter 13 bankruptcy offers a fresh start. Once your repayment plan is complete, remaining eligible debts are discharged, freeing you from the burden of overwhelming debt.

If you’re considering Chapter 13 bankruptcy or debt settlement, contact Liviakis Law Firm at 916 459 2364 to discuss your options.