How is Chapter 13 different from a debt consolidation service?
In a Chapter 13, the bankruptcy court can help the debtor in ways that debt consolidation services cannot. For example, the court can prohibit creditors from foreclosing on the debtor’s property, force unsecured creditors to accept a Chapter 13 Plan that pays only a percentage of their claims, and discharge a debtor from unpaid portions of debts. Additionally, interest on debts does not normally accrue during the Chapter 13 process, which can save the debtor significant amounts of money money (student loans may be an exception).
