Now, if you do have bad credit, there are other things to consider. A settlement might not take a chunk out of your score, but it will prolong the time it takes you to build up your credit, Ulzheimer says.
Finally, there’s the important issue of dollars and cents. If you go the settlement route, you are going to end up paying a chunk of your debt (maybe 12%, maybe 50%, maybe more) and your credit will have a seven year blemish. On the other hand, you could file for chapter 7 bankruptcy, have all of your credit card debt wiped out, have a 10 year blemish on your credit score, and your only out of pocket expenses will be your bankruptcy lawyer and court fees ( probably around $1,500).
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To be fair, a bankruptcy has a worse impact on the credit score than a settlement because of the breadth of the filing (it usually involves multiple accounts, whereas a settlement is just one), but a settlement is definitely not a get-out-of-jail-free card. By failing to note the adverse credit repercussions, the Times article makes it sound like it is.
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