Sometimes, debt settlement is a better option than filing for bankruptcy. It depends on how much you owe, how much income you are generating, and on what percentage of your debt you still have to pay.
Often, debt settlements leave you paying only 20% to 50% of total debt; but there are some debts that you may have to pay more on or even in full. And whatever you "save" (debt reduction amount) can count as taxable by the IRS. Plus, you'll have to pay the full amount you settle for in one lump sum in most debt settlement cases.
Thus, while debt settlement avoids having a bankruptcy on your record and avoids liquidation of assets, it will leave you paying more and have negative tax consequences. And debt settlement takes months to complete, while bankruptcies are much quicker to process.
We at San Diego Bankruptcy Attorney can help you understand whether debt settlement or bankruptcy is a better option for you.