When your financial situation has hit rock bottom and you have little hope of continuing to fulfill your monthly payment obligations, it is time to start considering several serious alternatives. Two of the most commonly selected courses of action are debt settlement and bankruptcy, both of which have their own unique advantages and disadvantages. Although debt settlement may have a lesser long-term effect on your credit score, it usually only works if you have a lump sum of money to offer your creditors. Most personal finance managers advise against the use of third-party debt settlement companies, many of which are mired in controversy. Although bankruptcy is a more severe option, it offers a quicker resolution and a return to a "clean slate" in a shorter period of time. To understand the true implications of debt settlement vs. bankruptcy, it may be beneficial to consult with a qualified financial expert in your area.