Options Comparison Chart

This section of our website provides Massachusetts 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. You will have to discuss your case with your bankruptcy attorney.

Debt Management (Credit Counseling)

+ (Pluses)– (Minuses)
Might obtain a good credit scoreMight not obtain a good credit score
PrivateMost Expensive Option
Can be sued but less likelyCan be sued
Avoid BankruptcyLow rate of Completion of DM Plans-50% est
100% repayment100% 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)
+ (Pluses)– (Minuses)
Private—No public disclosure of personal information. No public hearings.Income Taxes—cancellation of debt can be ‘imputed income’ but not if you are insolvent
Avoid BankruptcyCredit Score will be poor during the entire program
Less Expensive than Debt Management or Credit Counseling -Smaller total pay-outInterest, 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 Bankruptcy24–60 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 dischargedEmbarrassment
Least Expensive OptionOther Psychological issues—feeling of failure
Passing Credit score can be obtained faster than DSRemains on credit report for 10 years
12–14 months to a passing credit scoreDebt Settlement might be more preferable than a Chapter 13
Automatic Stay against all CreditorsChapter 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 home3–5 Year Debt Management Plan
Stop Repossession of CarBudget Discipline
Possible to eliminate 2nd mortgagePublic Disclosure of Information
Possible to reduce monthly car paymentMultiple Court appearances—at least 2
Automatic Stay against creditors and lawsuitsNo Discharge of Debts for 3–5 years
Possible to repay credit card debt with no interestMight have to repay credit card debt with interest
Possible to repay as little as 10% of credit card debt and no interestPossibly might have to repay 100% of credit card debt + interest
Possible to repay tax debt without interestIf case is dismissed, all taxes could still be due plus accumulated interest
No spending money on luxury goods and servicesNo spending money on luxury goods and services
If self-employed, you have to make all payments to Chapter 13 TrusteeCourt 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 arrearageCould 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