| Read Time: 4 minutes | Bankruptcy

Exploring Debt Relief Options In Hawaii: Navigating Through Debt Management & Chapter 13

A legal consultation in progress, with a lawyer pointing towards a document, next to scales of justice, symbolizing debt management and Chapter 13 bankruptcy advice.In Chapter 13 bankruptcy, your debts are systematically restructured, providing you with a designated period to fulfill your payment obligations. This process bears resemblance to debt management plans, leading many to deliberate the choice between bankruptcy and debt management. A Debt Management Plan, on the other hand, is an agreement negotiated with your creditors to resolve your debts. These plans are typically chosen under two circumstances: either when your budget allows only for minimal monthly payments to creditors, or when you’re currently experiencing financial difficulties but expect to be able to cover your debt repayments soon. If you’re navigating the complexities of debt relief and unsure of the best path forward, consulting with experienced Hawaii bankruptcy attorneys could offer clarity and direction, ensuring you make informed decisions for your financial well-being.

Debt Management vs. Chapter 13 Bankruptcy: Key Differences Explained

Chapter 13 bankruptcy and debt management plans are financial tools aimed at helping you manage and repay your debts, but there are a few key differences in Hawaii.

Defining Chapter 13 Bankruptcy

Chapter 13 is a formal legal process that happens under the US Bankruptcy Code. It involves the creation of a court-approved repayment plan lasting 3-5 years, overseen by a Hawaii bankruptcy trustee. The plan addresses both secured and unsecured debts, and any remaining debts are discharged at the end of the plan. A Hawaii bankruptcy attorney is recommended for the process.

Defining Debt Management Plan

A Debt Management Plan is an informal agreement with creditors, typically arranged through a credit counseling agency. It involves negotiating lower interest rates and monthly payments, consolidating debts, and creating a structured plan to repay creditors over an extended period. It does not involve the court system and there are no discharged debts at the end of the plan.

Understanding The Legal Distinctions Between Chapter 13 Bankruptcy & Debt Management Plans

Debt Management Plan is not a legal proceeding, and creditors are not obligated to participate. While it may provide relief through reduced payments, it lacks the legal protections that come with bankruptcy. Additionally, it does not result in the discharge of debts. It focuses on repaying creditors in a more manageable way while maintaining the original balances. Filing for Chapter 13 triggers an automatic stay, which halts creditor actions for a time, including foreclosure. The Hawaiian court’s oversight provides legal protection, and the debtor must adhere to the court-approved plan. Successful completion of the plan results in the discharge of remaining eligible debts, allowing a fresh start for the debtor. An infographic that explains about the expenses associated with debt management

Expenses Associated With Debt Management & Chapter 13 Bankruptcy

Getting out of debt is never a free journey as there are fees associated with both bankruptcy and Debt Management Plans. Debt Management Plans typically have a start-up fee as well as a monthly fee that you must pay to acquire services. The fees can vary, but it is usually a percentage of your creditor payments, a fee based on how many accounts are on your plan, or a flat fee. While bankruptcy may entail higher upfront expenses, including filing fees, mandatory course costs, and potential legal representation fees to safeguard your rights and guide your decisions, it offers significant benefits. Opting for bankruptcy with the assistance of a skilled Hawaii bankruptcy lawyer can provide a structured path to financial recovery.

The Impact Of Debt Management Plans & Chapter 13 Bankruptcy On Credit Score

An attorney writing on legal documents, with a gavel and scales of justice on the desk, representing guidance on Debt Management & Chapter 13 Bankruptcy.While a Debt Management Plan may impact credit scores, it is generally less severe than bankruptcy. The notation of participation in a Debt Management Plan may be visible on credit reports, but the score only drops slightly at the beginning of your plan. Chapter 13 Bankruptcy in Hawaii presents a proactive, albeit more substantial, approach to financial restructuring. Despite the immediate, more pronounced effect on credit scores and the seven-year visibility on credit reports, bankruptcy paves the way for a robust financial recovery. Over time, it offers a structured opportunity to rebuild your credit score, laying a solid foundation for regaining financial independence and security. Our law firm’s “2 Years to a 720 Credit Score” program is designed to help you improve and rebuild your credit, aiming to get your score up to 720 or higher in just two years.

Am I Better Off Choosing a Debt Management Plan Or Chapter 13 Bankruptcy?

Choosing between a Debt Management Plan and Chapter 13 bankruptcy in Hawaii hinges on your specific financial situation. If you’re facing overwhelming financial challenges that seem insurmountable, Chapter 13 could be the viable solution, particularly if safeguarding your home and assets is a priority. On the other hand, Debt Management Plans are often more affordable, carry fewer long-term implications, and offer greater flexibility if you decide to opt-out. For personalized advice tailored to your unique circumstances, consulting with a seasoned Hawaii bankruptcy attorney is advisable.

Contact Our Seasoned Hawaii Bankruptcy Lawyers Today!

At Blake Goodman, our team of proficient bankruptcy lawyers possesses a profound grasp of Hawaii’s bankruptcy regulations and is dedicated to guiding you through the intricacies of your financial predicament. We are here to assist you in charting a path to a renewed financial beginning. Don’t hesitate—contact us immediately for a complimentary consultation and embark on your journey towards financial recovery and stability. Let us provide the support and expertise you need to regain control of your financial future.

Author Photo

Blake Goodman received his law degree from George Washington University in Washington, D.C. in 1989 and has been exclusively practicing bankruptcy-related law in Texas, New Mexico, and Hawaii ever since. In the past, Attorney Goodman also worked as a Certified Public Accountant, receiving his license form the State of Maryland in 1988.

Rate this Post
1 Star2 Stars3 Stars4 Stars5 Stars