Bankruptcy is not your only possible solution if you are feeling trapped underneath your debt. Generally, people who end up in bankruptcy court have already exhausted other options either at the recommendation of a bankruptcy attorney or a credit counseling program. Before initiating your bankruptcy, consider whether one of these alternatives could help you get back on your feet.

Debt Counseling

It helps to know where you are with regard to your debt before moving forward.  A credit counseling agency can help you get a picture of your debt level and can inform you about your options. Credit counseling agencies tend to refer you towards debt management programs, which is where they help you establish any plans to pay back your debt over an extended period of time, usually four to six years at a fixed interest rate.  The downside of these debt management programs is that if one creditor decides not to accept these terms any more, your entire management plan can be shot. It doesn’t really offer the same protection that’s available with an official Chapter 13 repayment plan. You can certainly set up a debt management program, but in order to have the full protection of bankruptcy, you’ll need to consult with an attorney about your next steps.

Negotiating With Your Creditors

The other option aside from looking into bankruptcy or a debt management plan would be direct negotiation with your individual creditors to settle the debt. If you are still receiving income or you believe that you have some assets to sell, it’s an option to negotiate with your creditors, too. You might even be able to settle with your creditors for less than the total amount owed. It is essential to remember that debt settlement is entirely up to your creditor to accept and there may be tax consequences if you choose to settle the debt, so it is important to consult a skilled attorney before exploring debt settlement. Please also remember that if your creditors are not willing to work with you, or harass you, you may need a bankruptcy attorney anyways. If you are the victim of unfair collection practices, you can determine what state and federal laws protect your rights and proceed with a complaint.