 TITLE: What Is Debt Settlement? CONTENT: Is Debt Settlement Worth It?\n----------------------------\nBankruptcy has the most severe negative impact on personal credit of any single event, and debt settlement should only be considered as a last-ditch alternative to filing for bankruptcy—assuming all other options have been exhausted. Be aware, however, that for at least some individuals, debt settlement may not provide any meaningful benefit over bankruptcy.\nDepending on how high your credit score was prior to pursuing debt settlement, and how many other negative events you have on your credit report when you begin the process, debt settlement can be just as damaging to your credit scores as a bankruptcy. Associated negative credit score entries (missed payments, charge-offs and accounts sold to collection) all stay on your credit report for seven years from the date of the first missed payments that caused them—the same amount of time that Chapter 13 bankruptcy stays on your credit report.\nThe credit score impacts of all these negative events begin to diminish before their seven-year expiration date, but since Chapter 13 entails structured repayments to creditors similar to a debt settlement payment plan, it could cost you less and leave your credit in better shape after seven years than debt settlement does.\nDepending on your total amount of debt and the way a debt settlement company may structure its fees, expenses associated with debt settlement can exceed those associated with a bankruptcy filing. (This is especially true if you qualify for Chapter 7 bankruptcy,)\nIf your creditors refuse the terms offered by your debt settlement company, you may have little choice but to file for bankruptcy anyway—but only after racking up fee payments to the settlement company and losing months or years you otherwise could have spent rebuilding your credit.\nDebt settlement companies are a viable option for some consumers seeking to avoid bankruptcy, but the risk and expense they bring mean may mean that debt management programs, and even bankruptcy itself, may be better options. END