1.

What's the effect on my credit score?

Bankruptcy

Filing bankruptcy has a one -time negative impact on your credit, but you otherwise have a clean slate regarding your discharged debt and may immediately begin reestablishing good credit after filing.

Debt Consolidation Loan

Debt Consolidation stops the prior negative reporting and as long as you pay the new loan faithfully will begin to establish new good credit.

Debt Settlement

As you pay on the old debts you continually add negative late pay history to your credit and that hurts your credit score.

2.

What happens to my Credit Card and other Unsecured Debt?

Bankruptcy

All credit card and unsecured debt acquired in good faith is dischargeable.

Debt Consolidation Loan

You still owe a debt, yet on a new loan. The new loan must be repaid.

Debt Settlement

You must pay the negotiated portion of the Credit Card debt and the monthly fees of the settlement company.

3.

Who can I trust?

Bankruptcy

Lawyer's bankruptcy services and are supervised by the federal courts and the State Bar.

Debt Consolidation Loan

Some debt consolidation companies are reputable and may be regulated by the State or Federal agencies, but many consumers complain of mistreatment and fraud. There is no federal agency supervising these companies.

Debt Settlement

Some debt settlement companies are reputable but many consumers complain of mistreatment and outright fraud. Generally, this is an unregulated industry.

4.

How much are the fees?

Bankruptcy

Attorney's fee are disclosed and supervised by the courts and U.S. Trustee's Office. You know how much attorney's charge before you file.

Debt Consolidation Loan

You pay interest on the new loan, upfront fees to the debt consolidation company and penalties for late payments. Therefore, it's not possible to know exactly what fees/interest will be charged.

Debt Settlement

You pay the settlement company monthly fees for an extended period before any of your money is applied to your loans. Therefore, it's difficult to determine the full cost.

5.

What are the tax impacts?

Bankruptcy

No taxes are due for discharged debts. Debt collectors often misrepresent this fact.

Debt Consolidation Loan

You must pay additional taxes if the debts are settled for an amount less than what you originally owed.

Debt Settlement

You must pay additional taxes if the debts are settled for an amount less than your originally owed.