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Debt consolidation is a program where a company, in theory, determines your credit card debt and then takes a monthly payment from you, and then splits it among your various creditors.  The advantage is that there is one easy (but often large) payment per month and the creditors may stay off your back.  But in reality, since about one-fourth of my bankruptcy clients come to me due to failed debt consolidation programs, some of them scams, one has to be very careful.  These outfits often take a nice cut.  The biggest problem is that if they don’t reach agreement with every single one of your creditors, then the ones who were not included will eventually sue you and send you into bankruptcy, thus all the money you have been paying them has been a waste, and would have easily paid for a Chapter 7 Bankruptcy, which would have wiped out all of your debt 100%.  At the very least, even if you did not qualify for a Chapter 7, you could consider a Chapter 13, which is similar to the Consolidation plan, but it’s Court enforced, and if a Creditor doesn’t join in, it doesn’t get paid.  Also a Chapter 13 has a set time limit so you know when it’s done.  You may also be able to convert to a Chapter 7 if your financial situation continues to deteriorate.  So in conclusion, beware of debt consolidation programs.  If you need more information, please feel free to contact Attorney Mark O. Grater in Southeast Connecticut at 860-449-8059, of see his web cite at www.graterlaw.com

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