Bankruptcy Alternatives 

By any means bankruptcy is not the only resort in testing financial times. It is just the last resort when all other means do not seem to work. However, to explore non-bankruptcy alternatives, a detailed situation analysis is required to reach the realistic numbers and values.

First of all, you must know what are the monthly expenditures and payments excluding the debt services. Now, after deducting these expenditures from the finances available to you determine whether you can pay back your debts in say, next three years with the current interest rates. Analyze the possible ways to reduce expenses, increase income or sell assets. This will bring you to the question of whether or not it is possible for you to pay back the debts in three years without the help from agencies like credit counselors, financial advisors, debt consolidators, etc.

Bankruptcy can cause damage to your credit rating and long-term economic issues. Thus, you must explore all the alternatives before filing for it. You may renegotiate secured and unsecured loans instead of bankruptcy. It saves you from high interest on credit cards, car loans, house mortgage, medical bills, etc. Though bankruptcy doesn't discharge you from secured loan, it does save you from unsecured loans. Thus, carry out debt consolidation carefully or else you might end up converting even your unsecured personal loans into secured debts. Debt deferment, i.e. making arrangement to pay some bills at a later time, can help well in some cases than debt consolidation. It works well for secured loans.

The creditors have a lot to lose in the case of unsecured loans so if they know that you have bankruptcy filing on your mind they can really get down to negotiation that might do you good. However, you might not be able to take any more credit unless you pay the existing debt. Also, in many cases creditors are more than happy to negotiate on the interest rates if they know they might lose their money if you file for bankruptcy.

Negotiating your debt with the creditors can get really harassing. In such situations, debt negotiation companies, volunteer organization, debt reduction attorneys can work for you. They can extend their professional and legal expertise and save you from the financial mess of bankruptcy.

Summary: Bankruptcy is not the only option when you run into very high debts that you see not being paid off in another three years at the current rate. You may negotiate your secured and unsecured loans, go for debt consolidation and deferment, or simply negotiate the debt interest rates.