Bankruptcy vs. debt relief: Which is the best option for you?

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The biggest difference between bankruptcy and debt relief is that bankruptcy is a legal proceeding while debt relief is handled privately.

“I just need to stick to a budget. I’ll just get a second (or third) job. I won’t answer the phone or open my mail to avoid creditors. I just need more time.”

It’s human nature to want to fix your problems by yourself, especially something as stigmatized as debt. But the truth is, if you’re in debt and facing severe consequences, outside help like bankruptcy or debt relief may be the best pathway to a fresh start.

Neither option is easy, and there will be consequences, but the credit repair professionals at Lexington Law Firm know that when it feels like you are hanging from the edge of a cliff, it’s okay to ask for help. It’s best to talk to a professional about your situation before making a life-altering decision such as bankruptcy or debt relief, but in the meantime, we’ve assembled the basics of each to help you better understand your options.

Table of contents:

What is bankruptcy?
Chapter 7 bankruptcy
Chapter 13 bankruptcy
Pros and cons of filing for bankruptcy
When to consider bankruptcy
What is debt relief?
Debt relief options
Pros and cons of debt relief programs
When to consider debt relief
Which is better: bankruptcy or debt relief?

CodePen – Bankruptcy vs debt relief table

Bankruptcy	Debt Relief
Discharges eligible debt to give debtor a new start	Reorganizes debt to make it easier for the debtor to repay
No credit score or income required to qualify (except in Chapter 13 bankruptcy)	Handled privately between debtor, creditors and possibly a third party Not all debts qualify
Handled in the legal system	Options based on a credit score