When past-due bills and calls from debt collectors have you dreading the mailbox and the phone, bankruptcy may feel like your only way out. While filing for Chapter 7 or Chapter 13 provides one answer, that doesn’t mean that it’s the only one – or even the best one for you. Before moving forward with a decision that would impact you for years, take the time to explore your particular situation and what other options might make more sense.

While filing for bankruptcy has the benefit of immediately halting credit collection actions, it does not necessarily eliminate all of your debts. Specifically, if student loans, alimony, child support or property liens represent large portions of your outgoing funds, filing for bankruptcy will not help you at all. While credit card debt, medical bills, business debts and personal loans can be discharged, these other obligations will survive a bankruptcy filing. If this describes you, then investigating alternatives makes even more sense. So what are those other options?

• If you have credit card debt, home mortgage debt, or car loan debt, you may find your lenders are open to working out a new payment plan. Though this possibility may seem remote, consider the alternative that your lenders face if you file for bankruptcy. They would have to forgive your debts entirely, leaving them with nothing to satisfy your debt rather than being paid off over a longer period of time, or at lower interest rates.
• Take a good look around and determine what you can sell. As hard as it may be to give up assets, remember that filing for bankruptcy will leave you with little choice about what gets sold, while taking matters into your own hands may find you able to satisfy some of your debts and avoid the bankruptcy process entirely.
• Examine your spending habits to see what you can eliminate. Dining out or having food delivered, paying for multiple cable stations or subscriptions, and constantly buying clothes and shoes are examples of lifestyle choices that may be costing you more than you realize. When faced with the choice between eliminating luxuries and affecting your credit rating for years, those conveniences may become a lot less necessary to you, and what you are spending on them can easily be used to pay off your debts.

Examining your debt dispassionately can be a real challenge. For assistance, contact our bankruptcy attorneys to discuss your options.