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Consolidation/Lending Offers

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    Consolidation/Lending Offers

    Either the big credit card companies own stock in consolidation, debt relief, lending companies, or they turn a debtor's name over to a fleet of them in hopes of getting some money. I know several people who are being flooded with "pre-approved" offers to consolidate debt after ceasing to pay on their unsecured debt, to the tune of 2 or 3 offers per day by mail. Makes you wonder.

    I have also been told that debt consolidation many times does as much damage to your credit rating as Chapter 7.

    Thoughts? Opinions?

    Yes, the supermajority of debtors that try a debt management program (DMP) end up in bankruptcy (or a total failure of the DMP). For most it's a waste of time and money, but everyone has hopes that they can get their debt under control and pay it off. I think of a DMP, as I sometimes think of a Chapter 13, as more aspirational than a reality.

    However, my Chapter 13 fears have waned in the recent past. Now more than 60% of Chapter 13s end with a discharge. Must better than the DMPs. During the housing crisis from 2010-2015, the completion rate was below 40%. I now hear that some districts, even in California, are doing north of 70% success rate. That tells me that the Chapter 13s are working and are manageable for most people. Of course a Chapter 13 will never help someone that a.) can't budget, or worse, b.) refuses to budget.

    Simply put a Chapter 13 is much more powerful than a DMP and is much more powerful.

    (And it's not cynical to think that creditors want to work with DMP providers. The banks will generally get more from a DMP even if the debtor eventually files for Chapter 13 bankruptcy protection. The longer you're in the DMP, the more the creditor(s) recover in payments.)
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.


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