Is bankruptcy cheaper than a debt settlement?

Bankruptcy is always cheaper than debt settlement. For example, let's say you have $30,000 in unsecured debt on average bankruptcy and that you are paying the average fee for a chapter 7 bankruptcy of $1500. If you settle the debt at 50%, which is the average rate for debt settlement, you will pay $15,000 to settle your debts plus you may pay income taxes on an additional $15,000 of income. If you are at the 20% rate for income taxes, that will cost you an additional $3000 in income taxes. In the past 15 years a new industry called debt settlement firms has evolved. I haven't found one that works well, they all are borderline fraudulent. Most bankruptcy attorneys also do debt settlement and the first thing I tell my clients is that it usually doesn't work. Unless you have access to a source of cash quickly, you have no chance. In the 1980's I had great success in settling debts at 25%. Unfortunately, the debt settlement companies have ruined the debt settlement business since they really don't care about getting their clients the lowest deal. All they are about is getting paid about $500/month so they can collect their 18% fee. They keep almost all of the first 6 payments for their fees, then they start putting the future payments in a trust fund to settle debts. Thereafter they might settle one of the small debts. Meanwhile you are getting seriously in default on your debts. At around 6-12 months in default, the remaining creditors start suing you, you have no option now but to file bankruptcy.

Debt settlement is usually more expensive that bankruptcy. You might need to pay a lump sum to creditors. In chapter 7 you don't pay creditors anything. In chapter 13 you make monthly payments. Typically, the monthly payment for chapter 13 is less than a debt settlement.

Yes you will spend less filing a bankruptcy than in a debt settlement program, and your chance of a positive outcome is astronomically better.

A large percentage of "debt settlement" companies are scams. Don't fall for them. See a qualified bankruptcy lawyer to look at your real options.

You can settle credit card debt for 50% or less if you have the cash. Otherwise a Ch 7 is a good route.

Many times a bankruptcy is cheaper than debt settlement. Many people don't understand that by the time you are considering debt settlement programs your credit has already taken a hit. Filing for bankruptcy is the quickest way to work on re-establishing your credit because the bankruptcy will typically only last 4 months. If you do debt settlement programs you can be paying your creditors for years and in the end they will still report that you settled for less than the full amount owed. This negative information will stay on your credit report for 7 years but you won't be able to work on re-establishing your credit until your repayment is complete. Credit card companies are not obligated to work with debt settlement programs, so many will still call to collect while you are in debt settlement. They will also continue with other remedies such as lawsuits. Bankruptcy stops the creditors cold. They won't be able to call you, send you bills or sue you, and in most cases all the debt will be eliminated. Many people end up filing for bankruptcy after being in debt settlement programs for a year or more. Don't throw your money away. Consult with a reputable bankruptcy attorney who can analyze your situation and tell you all your options.

I don't know anything about debt settlement. Bankruptcy discharges unsecured debt.

Yes depending upon the amount of debt. Often you pay credit counselors for settling debts and don't get anywhere except for paying the credit counselor.