Choosing the Right Path to

Get Out of Debt

When you’re buried in debt, it’s easy to feel overwhelmed. But there are several proven options to regain control of your finances — and the best choice depends on your unique situation. Here’s a breakdown of the most common approaches and how they might fit your needs.

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1. Debt Resolution / Settlement

Debt settlement means negotiating with your creditors to accept less than the full balance you owe. You typically make a lump-sum payment or structured settlement to wipe out the debt.

• Why Some Clients Choose It: It can resolve debts faster than bankruptcy and avoid a court filing.

• What to Watch Out For: Your credit report will show the debt as “settled for less than owed,” and you may owe taxes on the forgiven amount. Creditors are not required to settle — and they could sue you while negotiations are happening.

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2. Chapter 7 Bankruptcy

Often called a “fresh start,” Chapter 7 allows you to eliminate most unsecured debts (like credit cards and medical bills) in as little as 4–6 months.

• Why Some Clients Choose It: It stops collections, lawsuits, garnishments, and harassing calls immediately through the automatic stay. It does not require a repayment plan.

• What to Watch Out For: You may lose non-exempt property, and it stays on your credit report for 10 years. You must pass a means test to qualify based on your income.

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3. Chapter 13 Bankruptcy

This option reorganizes your debt into a 3–5 year repayment plan, giving you time to catch up on mortgage arrears, car loans, or tax debt.

• Why Some Clients Choose It: It saves homes from foreclosure and vehicles from repossession, and it can reduce some secured debts (called a “cramdown”). At the end of the plan, remaining unsecured debts may be discharged.

• What to Watch Out For: It’s a long-term commitment. Missing plan payments can result in dismissal of your case.

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4. Debt Management Plan (DMP)

Through a nonprofit credit counseling agency, your payments are consolidated and your interest rates may be reduced.

• Why Some Clients Choose It: It helps you avoid bankruptcy and pay off debt with a predictable monthly plan.

• What to Watch Out For: It doesn’t reduce the principal, and it usually takes 3–5 years to complete.

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5. Doing Nothing

In some cases, doing nothing may be an option if you are “judgment-proof” — meaning you have no wages or assets creditors can take.

• Why Some Clients Choose It: If your income is exempt (like Social Security), creditors may not be able to collect.

• What to Watch Out For: Debts don’t go away quickly, and you risk lawsuits, garnishments, and liens until the statute of limitations expires.

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Our Guidance: Picking the Best Option for You

Every client’s situation is different — that’s why we take time to review:

• Your income and assets

• The types of debt you have

• Your goals — Do you want to keep your home or car? Stop wage garnishments? Get relief as quickly as possible?

After we understand your financial picture, we can explain whether debt settlement, Chapter 7, or Chapter 13 is the best fit — and what your next steps should be.

Debt Resolution Options:

Side-by-Side Comparison