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Which is Worse, Bankruptcy or a Write Off? – Jenny

“Dear Steve,

Bankruptcy or Writeoff? When it comes down to it which is worse? Is a debt write off from a company as bad as a bankruptcy? I have some funds coming soon and I was going to settle with them, but they tell me the debt is about to be written off. My question is do I let it write off and save the cash for paying other debts since my credit is already very bad, or do I settle the debt in hopes that I’ll salvage my credit to some degree?


Dear Jenny,

It’s really an apples and pears situation. A charge off or write off is simply an accounting function. But that doesn’t happen unless an account is seriously delinquent It’s the delinquency that hurts your credit.

And then it’s not really bankruptcy alone that hurts your credit, bankruptcy is a tool or solution applied to address the current financial situation. In fact for people with a number of delinquent debts bankruptcy can actually increase the credit score.

Your concern at this point should not be on what will manipulate your credit score but what will actually resolve the financial problems in the best way.

You mentioned you have some cash on hand to settle the debts. But before you even begin to think about settling this debt or that one you need to look at your overall situation. If settling one debt does not fix your entire situation and you can’t afford to payoff or settle the rest of the debts than you are simply still in debt.

Bankruptcy attorneys do not charge to meet with you to discuss your situation. I’d suggest that you click here to find a local bankruptcy attorney you like and discuss your situation with them. Meeting with a bankruptcy attorney does not mean you are going bankrupt, it means you are educating yourself about what bankruptcy would mean for you.

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The way your credit gets better is by resolving the bad debts and then getting back in the credit game and have new good credit reported about you. It’s very easy to rebuild credit once you pay off or close the door on the old bad stuff.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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