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 pluses and minuses 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.

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

Debt Management aka Credit Counseling
+ (Pluses)	– (Minuses)
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 aka Debt Negotiation
+ (Pluses)	– (Minuses)
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)
+ (Pluses)	– (Minuses)
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)
+ (Pluses)	– (Minuses)
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