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Greater Cincinnati and Northern Kentucky Debt Consolidation

bankruptcyA consolidation or “workout” is an attempt to modify one or multiple debts without the need for bankruptcy, usually through a debt consolidation agency. The main issue with a workout is that most debt consolidation companies don’t provide local creditors with a contract that enforces the agreement. In Northern Kentucky,  a debt consolidation agreement is subject to contract laws, and without a valid contract between you and your creditors the workout can’t be enforced in a Northern Kentucky County court. This means that, if a creditor such as a credit card (like Capital One), or a medical provider (like St. Elizabeth Medical Center) decides not to be bound by the terms of the workout, they can still sue you in the county in which you live. This is the central reason that debt consolidation agreements often do not work for Northern Kentucky residents.  Creditors that do not participate in the debt consolidation plan are entitled to file a lawsuit, which sometimes makes the entire exercise pointless. Only filing bankruptcy provides Northern Kentucky debtors with the muscle they need to force creditors to obey the rules.

Lawrence & Associates is experienced in debtor-creditor law and we can advise Northern Kentucky debtors on whether a non-bankruptcy workout will provide immediate debt relief.

Debt Consolidation vs Chapter 13 Bankruptcy

At Lawrence & Associates’ Northern Kentucky office, we hear many reasons why Northern Kentucky residents try to avoid bankruptcy by contacting a debt consolidation company. Many debtors believe bankruptcy is a bad thing, and try to avoid it by seeking a new repayment agreement with creditors. What those debtors don’t realize is that a Chapter 13 bankruptcy provides the same relief but also forces the creditors to abide by the new repayment plan. The downside of the debt consolidation agreement is that it will not freeze interest accumulation on unsecured debts, while a Chapter 13 bankruptcy will. Further, if the debt consolidation agreement fails, Northern Kentucky debtors will enter bankruptcy anyway, but with the added complication of having less money than they would have had if they had filed the Chapter 13 bankruptcy right away.

Our Bankruptcy Explained Series

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