Chapter 13 Reorganization Plan: The Best Way To Consolidate Credit Card Debts
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Chapter 13 Reorganization Plan: The Best Way To Consolidate Credit Card Debts

Published by: Ellie watson (44)
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Consolidating the credit card debt essentially means combining all debts into a single loan or paying all creditors through a single monthly payment. This can be done with the help of a debt consolidation or management company or by taking out a consolidation loan. There are a number of credit counseling agencies that may offer debtor some relief in the crisis situation. They do this with the help of debt consolidation programs, also known as debt management plans, which can greatly help the debtor to get back on track. It has been seen that many times credit card companies offer a low or no interest introductory rates to attract consumers to merge their debts. But they don’t tell the debtor that they have the right to review their credit at any point of time. They also have the right to increase the interest rates at any time, further disruptingone’s efforts.

Credit Card Debt Consolidation

By using Chapter 13 reorganization plan, one gets full debt consolidation and not just on the credit card bills. At the end of the program, whatever portion is left unpaid is legally eliminated. The plan gives zero percent interest repayment on all unsecured debts and debt arrearages. With this plan, one has the freedom to pay only they can, eliminating the rest. This is done by making a monthly budget which focuses on paying most of the important bills which include 1st mortgage/rent,food, clothing, vehicle expense, utilities, etc. The debtor gets substantial reduction for all these debts and the unpaid balance is legally discharged by the court once the program is completed. Credit card debt consolidation can easily be done by using Chapter 13 plan. It has been seen that at times creditors refuse to participate in certain debt consolidation plans. But under this plan, all creditors are bound by the bankruptcy laws and they do not have an option to leave in between by not filing a claim with the court. It also improves the credit by reducing the debt-to-income ratio and restoring timely payments to the creditors. These two factors play a significant role and can influence as much as sixty percent of the total credit score.

How Does Debt Consolidation Work?

By using chapter 13 plan, debts discharged in bankruptcy are not converted into taxable income. Since repayment on unsecured debt and arrearages are set at zero interest every penny one pays goes directly into the principal debt.

Ellie watson - About the Author:

In the above article the author is discussing about credit card debt consolidation.

Source: http://articleswrap.com/article/chapter-13-reorganization-plan-the-best-way-to-consolidate-credit-card-debts.html
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