Time Frame

• Credit card settlements and bankruptcy both look bad on your Experian, Equifax and TransUnion credit reports and pull your credit score down. Settlements and bankruptcies both show you had serious financial problems, which worries creditors when you try to open new accounts. Bankruptcy hurts you longer than settlements because it stays on your credit reports for up to a decade as compared to seven years for most other harmful information, according to the Federal Trade Commission website.
  
  

Difficulty

• Credit card companies usually will not negotiate with you until your accounts are late, but you can handle settlement discussions with them yourself once you stop paying. Bankruptcy does not require an attorney, but legal counsel makes the process easier. Federal law requires you to undergo financial counseling before and after the bankruptcy, according to the FTC, and you are barred from filing again for up to eight years.
  
  

Credit Repair

• Settlement can include credit repair if you negotiate that as part of your agreement with the original credit card company or collection agency, according to Bankrate.com. Explain that you want your credit card account to show that it was "paid as agreed" if you are dealing directly with the creditor, or ask the debt collector to remove its entry from your credit reports if you account was taken over by a collection agency. Insist on getting the terms of your settlement, including any credit reporting changes, in writing prior to paying off the account. The FTC advises that annualcreditreport.com provides free Experian, Equifax and TransUnion reports once a year so you can check that your settled accounts reflect the proper status.
  
  

Considerations

• Credit counselors help you negotiate with credit card issuers to create a payment plan called a debt management plan. A DMP often salvages your credit rating because you give money to the counseling firm, which redistributes it to your creditors. This shows up as on-time payments on your credit reports as long as you make your lump sum payment by the deadline. Counselors often get your creditors to drop your credit card interest rates or waive accumulated late payment fees, which reduces your balances.