Hi Punit - it sounds like you're asking if a Chapter 13 bankruptcy (where you decide with the courts on how to pay back the debt at a manageable payment) is better than a Chapter 7 bankruptcy (where your debts are discharged completely). Even if you're not referring to bankruptcy, the answer ultimately depends on your personal situation. Anytime you can pay your debts, you're in the best place so that you don't have those dings of bankruptcy, charge-off, etc. on your credit. The next best thing is to negotiate with your creditors to settle for a lesser amount or they may even work with you to lower your monthly payments to a manageable amount until you can get back on your feet to pay what's owed. Ultimately, as we advise everyone, communication with your creditors is key - call them right away, explain your situation and find out how they can help. However, before you do that, look at your finances and figure out what you can afford to pay out every month to creditors - that will give you the number to work with when you're speaking to your creditors. No head in the sand moment here - you'll need to be very proactive in handling this matter. Please let me know if I can assist further as I help clients on a daily basis get out of debt utilizing a 200 year old vehicle that most overlook for this strategy. Kindest Regards. .