Many people consider going to a debt consolidation agency before filing for bankruptcy. These debt consolidation companies advertise that they can lower your monthly payments and improve your credit, but the truth is different. Often times they will take your money and work to lower your payments, but won't have any success. This is because they don't have any legal power to make your creditors lower the payments.
The way these debt consolidation agencies work is they take monthly payments from you and try to negotiate with your creditors to pay less. They give some of your money to the creditors, and they keep the rest. The problem is that the creditors have no reason to agree to accept less money. In fact, since the creditors are only interested in money, they have no reason to accept these lower offers at all. If just one creditor doesn't agree to a lower payment, they can sue you to collect and the consolidation company can do nothing to help you. There are even reports of debt consolidation companies taking peoples' money and then disappearing without doing anything to help.
Why is a bankruptcy lawyer different? Unlike a debt consolidation company, a lawyer can use the law to force creditors to give you a better deal. This is because The Bankruptcy Code is a very powerful law that can destroy or lower debts whether or not the creditor agrees. A good lawyer also knows how to use the law to protect your property and money from things like garnishment and seizure. Thus an attorney can help and protect you in powerful ways that a debt consolidation company cannot.
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