Law Office of Timothy E. Wilfong, LLC

You Deserve a Fresh Start - Phoenixville, PA


Call us at 610-935-5555 for a Consultation

Helping Clients Since 2008


 
 
Law Office of Timothy E. Wilfong, LLC
20 S. Main Street, Phoenixville, PA 19460
 
 
 
The Truth about Debt Consolidation  
 
 
Going through a debt consolidation company may seem like a good idea at first but there are several drawbacks.  Before contacting a debt consolidation company please read the information below.  
 
 
You Deserve a Fresh Start

What are Debt Consolidation Plans?

The Law Office of Timothy E. Wilfong currently does not offer a debt consolidation program, however, has provided this information for consumers to consider filing a Chapter 13 Payment Plan as an alternative to debt consolidation. You probably have heard one of the endless radio commercials advertising debt consolidation as the solution to your financial problems.  What exactly are these companies offering as the silver bullet.

 
Under a 'Debt Management Plan' debtors enter into an agreement with a Debt Consolidation Company to help manage their payments. These companies have a variety of strategies to reduce your monthly payments to creditors. Typically, how these plans work is that a debtor will make one monthly payment to the Debt Consolidator and it in turn will make payments to the debtor's creditors. 
 
The consolidator will attempt to negotiate with your creditors to lower your interest rates, reduce your minimum payment, and waive penalties.  Some creditors voluntarily choose to work with the consolidator.  However, your creditors have no legal obligation to participate and often ignore the consolidator's efforts.  A Chapter 13 Plan is different because creditors are ordered by the Court to follow a confirmed Chapter 13 Repayment Plan and must participate.
 
Another strategy often used in a Debt Management Company is to consolidate your unsecured creditors into a home equity loan at a lower interest rate.  This is a higher risk strategy because it puts your home at a greater risk of foreclosure especially when you are already financially vulnerable.  In comparison to a Chapter 13 Bankruptcy, your mortgage payment is actually subtracted from your payments to unsecured creditors, so you pay less.
 
Furthermore, a disadvantage of going with a Debt Consolidator is that if a debtor misses just one payment to the consolidator then that constitutes a missed payment to every single one of the debtor's credit cards.  Therefore a missed payment can cause a serious hit to a debtor's credit score, and lead to the participating creditors to drop out of the Debt Management Plan while raising your interest rates. This will leave you in a worse position than prior to hiring the consolidator.
 
In comparison, the Court may dismiss a Chapter 13 Plan for missed payments, however, normally the Bankruptcy Trustee will work with debtors to make up the missed payments or allow the debtor to amend the Chapter 13 Plan to include the missed payments. 
 
Please call for a no obligation, consultation to evaluate your specific financial circumstances to determine if a Chapter 13 payment plan will work for you at (610) 935-5555.
 

Law Office of

Timothy E. Wilfong, LLC

20 S. Main Street

Phoenixville, PA 19460

Phone-(610) 935-5555

Fax-(610) 680-3910

timwilfongesquire@gmail.com