Options Comparison Chart

This section of our website provides Connecticut residents with information about your options and will assist you in making an informed decision as to whether bankruptcy or debt settlement is right for you. This chart outlines the positives and negatives of the informal and formal options to solving your financial problems. The chart won’t answer all your questions so feel free to contact our office for more clarification.

We’ve also launched a debt repayment calculator which will give you a close idea of the numbers you’ll be dealing with. Make sure to check it out after viewing the options below.

This Chart is not intended to be a definitive presentation on the positives and negatives of the 4 major bankruptcy options and you have to discuss your case with your bankruptcy attorney.

Debt Management (Credit Counseling)

+ (Positives) – (Negatives)
Might obtain a good credit score Might not obtain a good credit score
Private Most Expensive Option
Can be sued but less likely Can be sued
Avoid Bankruptcy Low rate of Completion of DM Plans-50% est
100% repayment 100% repayment-higher monthly payment than DS- 60 months; you still pay interest on the debt
Some Creditor Harassment
No Automatic Stay against Creditor as in Bankruptcy

Debt Settlement (Debt Negotiation)

+ (Positives) – (Negatives)
Private—No public disclosure of personal information. No public hearings. Income Taxes—cancellation of debt can be ‘imputed income’ but not if your are insolvent
Avoid Bankruptcy Credit Score will be poor during the entire program
Less Expensive than Debt Management or Credit Counseling -Smaller total pay-out Interest, penalties, late fees continued to run
Lower Monthly Payment than Debt Management or Credit Counseling. You aren’t paying interest on the debt. Credit Harassment more likely than Debt Management
Can be preferable to Chapter 13 where Trustee insists on a 100% dividend to unsecured creditors. Doesn’t Stop Law Suits or garnishments
Might have a lower monthly payment than in Chapter 13 Bankruptcy 24–60 months to complete Debt Settlement Plan
Payment in full on debts versus pro rata payments in Chapter 13-more debts are settled quicker. Low rate of completion
No Automatic Stay against Creditors as in bankruptcy

Bankruptcy – Chapter 7 (Debt Cancellation)

+ (Positives) – (Negatives)
Fast 90 days debts are discharged Embarrassment
Least Expensive Option Other Psychological issues—feeling of failure
Passing Credit score can be obtained faster than DS Remains on credit report for 10 years
12–14 months to a passing credit score Debt Settlement might be more preferable than a Chapter 13
Automatic Stay against all Creditors Chapter 7 might not be available due to income and expenses, can’t pass Means Test, assets might not be exempt, previous filing might be a bar.

Bankruptcy – Chapter 13 (Debt Reorganization)

+ (Positives) – (Negatives)
Stop Foreclosure and save home 3–5 Year Debt Management Plan
Stop Repossession of Car Budget Discipline
Possible to eliminate 2nd mortgage Public Disclosure of Information
Possible to reduce monthly car payment Multiple Court appearances—at least 2
Automatic Stay against creditors and lawsuits No Discharge of Debts for 3–5 years
Possible to repay credit card debt with no interest Might have to repay credit card debt with interest
Possible to repay as little as 10% of credit card debt and no interest Possibly might have to repay 100% of credit card debt + interest
Possible to repay tax debt without interest If case is dismissed, all taxes could still be due plus accumulated interest
No spending money on luxury goods and services No spending money on luxury goods and services
If self-employed, you have to make all payments to Chapter 13 Trustee Court ordered wage withholding if you are an employee, once Debt Management Plan is confirmed.
Chapter 13 Trustee can monitor your finances and tax refunds and claim tax refunds
Can spread mortgage arrearage over a 5 year period. Trustee can insist on making mortgage arrearage payments over 3 year period
Possibly can reduce car payment and use the savings to pay on mortgage arrearage Could stretch out for a longer period of time your car payments
Can handle debt in ways a Chapter 7 can’t handle the debt. More expensive than Chapter 7
Considerable documentation is required for all of your finances