Alternatives to Bankruptcy

With the number of personal bankruptcy filings at an all-time high, it's clear that many people consider bankruptcy a viable method for overcoming their debts.  Although there are quite a few benefits to bankruptcy, if you are struggling with mounting debt there are some alternatives you may want to consider first.

• Debt Consolidation:  Through debt consolidation you can consolidate your debts into one loan.  Instead of owing multiple creditors, you now just have to repay one creditor.  This is an excellent option for people considering filing for Chapter 13.

• Debt Settlement:  Debt settlement offers people the chance to negotiate with creditors to try and reduce the amount of debt that is owed. For example, if you owe $10,000 in debt, you may be able to negotiate a deal with your creditors so you only have to repay 50-75% of your debt instead of all of it.  While not every creditor will agree to debt settlement, there are many creditors who will.

• Credit Counseling: Credit counseling works much like the Chapter 13 bankruptcy process. The credit counseling agency will help you come up with a repayment plan that you can feasibly pay off over time.

The main benefit to these alternatives is that they are not as damaging to your credit score as a bankruptcy is. A bankruptcy will appear on your credit report for 10 years, making it difficult to obtain new lines of credit.

To learn more about debt relief, click here to find a bankruptcy lawyer near you!