LOOKING FOR HELP WITH DEBT RELIEF?
Understand your options before you choose one.
Bankruptcy, debt consolidation, and debt settlement all work differently — and affect your credit differently.
Debt Settlement
You stop paying creditors directly and instead build funds in a dedicated account while a licensed company negotiates reduced payoff balances on your behalf. Settlements commonly land well below the full balance owed.
Credit impact
Accounts typically go delinquent during negotiation, which lowers your score in the short term. Once settled and reported as paid, scores generally begin recovering — many clients see meaningful improvement within 12–24 months of completing a program.
Debt Consolidation
Multiple unsecured balances are combined into a single loan or payment plan, usually at a lower interest rate, so you make one predictable monthly payment instead of many.
Credit impact
Your accounts stay current, so the credit impact is far gentler than settlement. Opening the new loan may cause a small temporary dip, but on-time payments and lower utilization typically help your score over time.
Bankruptcy (Chapter 7 vs. Chapter 13)
Chapter 7 discharges most unsecured debt in a few months but requires you to pass a means test. Chapter 13 restructures your debt into a court-approved 3–5 year repayment plan, letting you keep more assets.
Credit impact
The most severe option. Chapter 7 stays on your report for 10 years, Chapter 13 for 7 years. Scores drop sharply and rebuilding takes years — this should be a last resort after other options are explored.
Licensing matters
Many states require debt settlement and consolidation companies to hold a specific license to legally perform these services for you. Always confirm a provider is properly licensed in your state before signing anything.
More information at encompassrecoverygroup.org →
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