Chapter 7 vs Simultaneous Debt Settlement vs Chapter 13
Chapter 7 is often faster to recover from than a long debt settlement program, and Chapter 13 is not the only option if you cannot file Chapter 7. The comparison that matters is what each path does to your timeline, lawsuit risk, cost, and chance of finishing.
Many people we speak with during our free consultations are surprised to learn that Chapter 7 is not nearly as damaging as the debt-relief industry — and society itself — often make it out to be. If you’re worried about future credit, you should know that you will generally begin to recover from a Chapter 7 years faster than from a long-term debt settlement program.
The problem many people face is that they can’t qualify for Chapter 7 because of income or assets. In that situation, Chapter 13 is often their only bankruptcy option.
A Chapter 13 is often unappealing because of the financial constraints it imposes. That is why we created the Strauss Method as an alternative to Chapter 13. Jared developed this approach in 2002 and has helped thousands of people, families and small businesses avoid Chapter 13 ever since.
Read through the chart below to compare the important differences between these options.
Scroll the chart left to right on mobile.
| Long-Term Settlement | The Strauss Method | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy | |
|---|---|---|---|---|
| Time to complete | Generally advertised as 24–48 months, most don't complete. | About 6 months. Some finish sooner. Some take longer. | Debts are generally discharged within 4 months of filing. | Generally 3–5 years. |
| Exposure to interest and fees | The main cost risk is a lawsuit. If an account is placed with an attorney and they win, the balance can grow because of attorney fees, court costs, and post-judgment interest. | Greatly reduced, because the debts are usually settled in a matter of months — generally before attorney placement becomes likely. | None, if you discharge the Chapter 7. | None, if you complete the Chapter 13. |
| Exposure to lawsuits | Settling over 24–48 months makes attorney placement and legal action much more likely. | Greatly reduced, because the debts are usually settled before that happens. | None, if you discharge the Chapter 7. | None, if you discharge the Chapter 13. |
| Time to recover credit | A 24-month program can take 4 years. A 48-month program can take 6 years. | Our typical client finalizes the negotiations in about 6 months and generally recovers within 2 years after the final settlement payment. | Generally within 2 years of the Chapter 7 being discharged. | Generally 5–7 years after filing, depending on the length of the Chapter 13 plan. |
| Uncertainty of cost and outcome | You won’t know the total cost or outcome until the last account is settled. | When you negotiate simultaneously, you greatly reduce this risk because the accounts are resolved close together. | None, if you discharge the Chapter 7. | None if you complete the Chapter 13. See the success-rate row. |
| Typical fee | 20–25% of what you OWE. | 20% of what we save you — often less than half the cost of a 20–25% of-what-you-owe fee. | Generally $2,000–$3,000. | Generally $3,000–$5,000. |
| Typical success rate | A 2020 study commissioned by the debt-settlement industry found that 22% of enrolled consumers settled all of their accounts within 48 months. | The reason debt settlement completion rates are so low is because the industry enrolls people into their program who lack the financial resources to get the job done. The secret sauce is simple: you need the money to settle them. | Over 90%. | About 40% receive a Chapter 13 discharge. Some convert and receive a Chapter 7 discharge instead. |
Chapter 7 is often the cleanest option if you qualify. It is usually faster, cheaper, and more certain than a long-term settlement program, and most people begin rebuilding credit within two years of discharge.
If you cannot file Chapter 7, do not assume a 3–5 year Chapter 13 or a 24–48 month settlement program is your only path. Those options take years, carry more uncertainty, and — in the case of long-term settlement — leave you exposed to lawsuits while accounts sit unpaid. See the pros and cons of long-term debt settlement.
The Strauss Method is built for that gap: settle the accounts close together, in months rather than years, so you can reduce lawsuit risk, know the outcome sooner, and start recovering faster. The key is understanding how debt settlement actually works before you choose a path.
Usually no. A Chapter 7 stays on the report for up to 10 years, but most people start rebuilding within two years of discharge. A 24–48 month settlement program delays that clock until the last account is settled, so recovery often starts years later than after a Chapter 7. See credit after bankruptcy.
Long-term programs are generally advertised as taking 24–48 months, leave accounts unpaid, and have a low completion rate. The Strauss Method settles the enrolled accounts close together, in months rather than years, so you know the outcome sooner and spend less time exposed to lawsuits. Learn more about the Strauss Method.
No. If the problem is unsecured debt and you can fund a settlement, settling in months can cost less and finish years sooner than a 3–5 year Chapter 13. Chapter 13 is still the tool to look at if you are trying to save a house. See our alternative approach to Chapter 13.
Read our free 4-part educational series, or have Jared look over your accounts with you.