Before doing anything, you should evaluate all of your options. Go to the Credit Counselor and see what they can offer. Consolidating under Chapter 13 is much more powerful. Often times, the credit counselor will call each of your creditors to see if they will accept a lower payment or a lower interest rate. The creditor has control over the payment terms.
A Chapter 13 plan is designed to pay the creditors back according to your income and expenses. Interest is automatically eliminated for unsecured debt and reduced from certain secured debt. A plan is submitted to the Court and the creditors must accept the filing.
A credit counselor is often powerless to consolidate back taxes, student loans, automobile payments, child support, co-signed debt or any other secured debt. A Chapter 13 can usually incorporate this type of debt.
