For a time, bankruptcy impacts your credit. Chapter 7 Bankruptcy stays on your credit report for 10 years and Chapter 13 for seven years.
Usually this is the lower cost option; especially Chapter 7 Bankruptcy.
Historically, most people who file Chapter 13 risk not completing it, which wastes money and time.
Chapter 7 is the fastest way out of debt. You can start rebuilding your credit right away.
It may impact your immediate financial goals. Chapter 13 takes three to five years to complete.
You’re under court protection, which eliminates judgments, liens and wage garnishments, and stops all collections; even a foreclosure.
It’s public. This can impact people who work in financial services or a field that requires a very clean background check.
On average, your interest rate for credit cards and bank loans is reduced to 6%; resulting in lower monthly payments.
They’re rigid and inflexible. If you miss a payment, the plan is typically over.
It may be more affordable and have a fixed pay-off time of 60 months or less.
You’ll need steady income as these plans last 4-5 years with fixed monthly payments.
It doesn’t impact your credit score.
Accounts enrolled in the plan will be closed, which impacts your age of credit.
You won’t deal with collectors.
You’ll likely pay less and get out of debt faster.
You must have the money to pay off the debt at the negotiated amount.
If you’ve missed payments with your creditor, and are in collections, settling will eventually help your credit.
Your credit score temporarily drops, if it has not already, due to late payments.
It can improve your financial situation.
Taxes may apply to the amount of debt forgiven in your settlements.
It can help you avoid being sued if you’re already in collections.
Your account will be subjected to internal/external collections, which could include being sued.
It can help you move on to accomplish other financial goals as you can apply for credit cards, loans, and mortgages right after your last settlement payment.
Once you’re committed to a Debt Settlement Agreement, you can’t miss a scheduled payment as you’ll risk nullifying the agreement.
You may get a lower interest rate that applies to all of your debt.
Depending on the loan terms, you could pay more interest across the life of the loan.
You may pay off your debt sooner.
You could get extended payment terms keeping you in debt longer.
Having one payment each month may make it easier to keep track of and pay on time.
You may get an introductory interest rate that could increase, which has a greater impact since all of your debt is now under this rate.
Some companies may offer too-good-to-be-true programs so caution is necessary.