Credit Counseling Pros

• Credit counseling agencies work with consumers and their creditors to reach mutually agreeable payment plans, which can help prevent people from being sued for personal debt or being forced to file bankruptcy.
  
  

Credit Counseling Cons

• Some credit counseling companies do not properly handle consumer payments to their firm and could make payments to creditors late or not at all. This is potentially devastating to a consumer's credit report and finances.
  
  

Chapter 7 Bankruptcy Pros

• Chapter 7 bankruptcy totally removes legal obligation for honest credit card debt. This is a huge relief for many people who just cannot handle their debt burden any longer.
  
  

Chapter 7 Bankruptcy Cons

• Chapter 7 bankruptcy stays on a credit report for 10 years, and dramatically affects your ability to get credit for at least some period of time. It also can cause the loss of many assets, including houses, savings accounts, vehicles and stocks.
  
  

Chapter 13 Bankruptcy Pros

• Chapter 13 bankruptcy is similar to credit counseling, except it is formal legal protection while repaying debts in a restructured way. There are no concerns about mishandled payments, as they are handled by a federal court.
  
  

Chapter 13 Bankruptcy Cons

• During a repayment plan, you cannot get any new credit without federal court approval. Also, Chapter 13 remains on a credit file for 7 years.