The Complete Comparison
| Factor | Consolidation | Settlement | DMP | Chapter 7 | Chapter 13 |
|---|---|---|---|---|---|
| Timeline | 3-5 years | 2-4 years | 3-5 years | 3-4 months | 3-5 years |
| Debt reduced? | No | Partially | No | Yes -- discharged | Yes -- remainder discharged |
| Stops lawsuits? | No | No | No | Yes (automatic stay) | Yes (automatic stay) |
| Stops garnishment? | No | No | No | Yes | Yes |
| Fees | Loan interest | 15-25% of enrolled | $25-75/month | $1,500-2,500 | $2,500-4,000 |
| Tax consequences? | None | Yes (1099-C) | None | None | None |
| Credit impact | Mild (hard inquiry) | Severe (missed payments) | Mild (accounts closed) | Severe initially, recovers faster | Moderate |
| Success rate | ~50% (many re-accumulate) | 35-60% of enrolled debts | ~55-65% | ~95% get discharge | ~33-40% complete |
| Creditor cooperation | Required | Required | Required | Not needed | Not needed |
| Court supervised? | No | No | No | Yes | Yes |
| On credit report | Loan shows | 7 years (each settled account) | Accounts closed | 10 years | 7 years |
| Best for | Small debt, good credit | Moderate debt, can wait | Moderate debt, steady income | High debt, low income | High income, behind on secured |
The Bottom Line
If you qualify for Chapter 7, it is almost always the fastest, cheapest, and most effective option. If you do not qualify for Chapter 7 and have secured debt to catch up on, Chapter 13 provides court-supervised relief that no private company can match. Non-bankruptcy options work best for smaller debts where you can afford to repay the full amount.