Debt Settlement & Bankruptcy Guide
Understand your options when debt becomes overwhelming. Compare debt settlement, bankruptcy chapters, and find the best path to financial recovery with professional guidance.
Debt Relief Assessment
Get personalized recommendations based on your financial situation
Your Financial Information
Financial Analysis
Bankruptcy Eligibility
Recommended Approach
Your debt-to-income ratio suggests bankruptcy may be the most effective option for financial relief.
Compare Your Options
Understand the pros, cons, and requirements of each debt relief approach
Debt Management Plan (DMP)
Work with a credit counseling agency to negotiate lower interest rates and create a structured payment plan
Pros
- Lower interest rates
- Single monthly payment
- Professional guidance
Cons
- Monthly fees
- Accounts may be closed
- Requires steady income
Best For:
Best for manageable debt with steady income
Debt Settlement
Negotiate with creditors to pay less than the full amount owed, typically 40-60% of original debt
Pros
- Reduce total debt amount
- Avoid bankruptcy
- Faster than minimum payments
Cons
- Severe credit damage
- Tax implications
- No guarantee of success
Best For:
For severely delinquent accounts or financial hardship
Chapter 7 Bankruptcy
Liquidation bankruptcy that discharges most unsecured debts within 3-6 months
Pros
- Quick debt discharge
- Fresh financial start
- Automatic stay protection
Cons
- Severe credit impact (7-10 years)
- Potential asset loss
- Public record
Best For:
For overwhelming debt with limited income and assets
Chapter 13 Bankruptcy
Reorganization bankruptcy with a 3-5 year repayment plan to pay back debts partially or in full
Pros
- Keep your assets
- Stop foreclosure
- Structured payment plan
Cons
- Long-term commitment
- Severe credit impact
- Court supervision
Best For:
For regular income with assets to protect
Bankruptcy Chapters Explained
Detailed comparison of Chapter 7 and Chapter 13 bankruptcy
Chapter 7
Liquidation Bankruptcy
Quick discharge of most unsecured debts with potential asset liquidation
Eligibility Requirements
- Pass means test (income below median)
- Complete credit counseling course
- Haven't filed Chapter 7 in past 8 years
Dischargeable
- Credit cards
- Medical bills
- Personal loans
Not Dischargeable
- Student loans (usually)
- Recent taxes
- Child support
Chapter 13
Reorganization Bankruptcy
Court-supervised repayment plan allowing you to keep assets while paying debts over time
Eligibility Requirements
- Regular monthly income
- Secured debt under $1,395,875
- Unsecured debt under $465,275
Dischargeable
- Credit cards
- Medical bills
- Personal loans
Not Dischargeable
- Recent student loans
- Child support
- Alimony
Important Warnings & Considerations
Critical information to protect yourself during the debt relief process
Avoid Bankruptcy Mills
Be wary of law firms that process hundreds of cases without personal attention
Don't Drain Retirement
401(k) and IRA funds are protected in bankruptcy - don't empty them to pay unsecured debt
Timing Matters
Don't make large purchases or transfer assets before filing bankruptcy
Get Multiple Opinions
Consult with several attorneys to understand all your options
Legal Disclaimer
This information is for educational purposes only and does not constitute legal advice. Bankruptcy and debt settlement have serious legal and financial consequences. Always consult with a qualified attorney or credit counselor before making decisions about debt relief options.
Frequently Asked Questions
Common questions about debt settlement and bankruptcy
Need Professional Debt Relief Help?
Get personalized guidance from qualified attorneys and credit counselors to find the best debt relief option