Debt Relief vs. Bankruptcy: Understanding Your Options – Investopedia

When debt becomes overwhelming, debt relief and bankruptcy are two options for getting your life back on track. They work differently, and each has its pros and cons. Debt relief can involve consolidation and debt counseling, which involves lowering the cost of repayment but also debt settlement which involves repaying less than is owed in a negotiated settlement with lenders. Bankruptcy involves seeking protection from creditors for debt that can not be repaid. Here is what you need to know if you’re trying to choose between them.