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There are Alternatives to Filing Bankruptcy!

Alternatives to Filing Bankruptcy

There is just no easy way to get out of debt. You have to face up to the consequences.
You need alternatives because bankruptcy is not always the answer, as the effects are long lasting. Plus the new law has made it even harder to file bankruptcy. There are four ways to handle debts that are out of control. They are listed in best to worst with regards to the effect it will have on your credit report.

Alternatives to Filing Bankruptcy—If Your Credit is Still Good

First, if your credit isn't in terrible shape, can you reduce your other expenses, even if it means making hard choices or just change your lifestyle to fit your income? Some ways to do this:

Selling the second car

Pulling equity out of your home

Applying for a non secured signature loan

Obtaining a loan from a relative

Selling your home and paying off your debts with the proceeds and then renting

Cashing out your 401K/retirement benefits

Selling family heirlooms, jewelry, etc…

Alternatives to Filing Bankruptcy—If Your Credit is Not Good

Second, if your credit is already gone or one of the above isn't an option, go through Consumer Credit Counseling Services (CCCS). Check your yellow pages for the local number. In this way you're paying off your debts as if you were in a Chapter 13 bankruptcy, but you don't file a bankruptcy.

Alternatives to Filing Bankruptcy—If CCCS won’t take you

Third, if CCCS won't take you, you may want to consider bankruptcy. Filing a Chapter 13 takes longer, but your credit is in a little better standing than if you file a Chapter 7. In Chapter 13 you are given up to 5 years to pay off your debts. The disadvantage is that you're in bankruptcy for up to 5 years plus your credit report shows your bankruptcy for 7 more years after you have finished paying off your debts.

Alternatives to Filing Bankruptcy—Only Way Out?

Fourth, if you are so far in debt that you can never repay it, then the best solution may be a Chapter 7 bankruptcy. Chapter 7 is the least desirable credit wise, but you are typically out of bankruptcy in 6 months and you don't have to repay any debt. The disadvantage is that this shows on your credit report for 10 years from the date of filing your bankruptcy, and creditors are starting to tighten their credit requirements, and you may have a tough time getting future financing.

There is no magic solution. Don't believe anyone who tells you otherwise. These are just a few of your alternatives to filing bankruptcy to consider. You should always seek legal advice before making any harsh decisions.

Additional alternatives to filing bankruptcy are discussed on this page, please click here.

Now if you have been working to improve your situation and need just a little help, then help has arrived. I have provided you a complete do it yourself credit repair kit. Using this can save you thousands of dollars. Take a look at this page for more information. Tell me more about credit repair!

Disclaimer: This information deals with consumer bankruptcy. Each state has its own bankruptcy laws, so you need to check with your state for details. The information is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of consumer bankruptcy. Every individual's factual situation is different and you should seek independent legal advice regarding specific information.

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