The first benefit of filing bankruptcy compared to debt consolidation companies is that all unsecured creditors are wiped out in a Chapter 7 bankruptcy. In a debt consolidation program, you are only hoping that most of the credit card and medical creditors agree to reduce their balance. In most cases, the individual is still paying hundreds of dollars each month-not to mention the hefty fees that you are paying the debt consolidation company. Another benefit is Chapter 7 bankruptcy is completed in 4-5 months. Debt consolidation programs usually last a few years. This means that for someone filing a bankruptcy compared to a debt consolidation plan, the individual is able to immediately begin working on repairing his or her credit report. Many people mistakenly believe that by joining a debt consolidation plan they are helping their credit because their debts are settled. However, in most cases the person’s credit score goes down. For the bankruptcy filer, while it is true they take a negative hit on their credit score by filing, compared to the debt consolidation plan, they usually have a 3-5 year head start in repairing their credit score….and at the same time it saves thousands of dollars!