Task

Stopping the Collections

It is only voluntary. They do not have to stop the collections.

Upon filling a petition in bankruptcy, a Court order is automatically issued to stop all collection activity.

Repossession of Cars and Home Foreclosures

Cannot help with secured debt.

A Chapter 13 bankruptcy allows you the opportunity to catch up on delinquent payments and keep your cars and homes.

Who You Actually Pay for Help

Who knows? Anyone can advertise themselves as a Debt Consolidator/ Negotiator and use incorporated names that lead you to believe they are part of the government. This is an unregulated area of business. The Texas Attorney General recently obtained a temporary restraining order against "Foreclosure Assistance Solutions," a business offering to negotiate with mortgage companies for delinquent consumers. The company is charged with operating an unlawful scam.

A Court-appointed person, who must maintain a performance bond, is regularly audited by the United States government, and is overseen by the Office of the United States Trustee.

Appearance on Credit Report

The credit report will show the number of months you are delinquent for each creditor not paid. The farther behind on payments, the less likely you can obtain another loan.

The creditors know, upon discharge in a Chapter 7, you have no other financial obligations preventing you from paying the new loan. It usually takes 4 months to obtain a discharge. While in a Chapter 13 plan, you can obtain new loans, after getting Court approval of the loan's reasonability and affordability.

Stopping Interest Accrual on General Unsecured Debt

The lenders may or may not lower interest charges. It is completely voluntary.

Interest, late fees, and overage charges are all stopped upon filing a petition in bankruptcy.

How Much You Actually Pay

It's a gamble. Each lender decides whether or not to lower the debt balance. The negotiators can only approximate how much and how many monthly payments are needed to be accepted by the creditors.

There are no negotiations with creditors. It is your schedules which determine the amount, if any, that is paid to the lenders. If a Chapter 7 is not abusive and in your best interest, and you have no excess income or property, you pay nothing to unsecured creditors, such as credit cards and pay-day loans. If a Chapter 13 is elected, you pay from you disposable income (i.e.: the account which remains after subtracting your budget from your income).