You may be one of the many people who are reluctant to file for bankruptcy despite crushing debt. We understand your feelings. Despite extensive efforts at public education, bankruptcy still has a negative stigma attached to it.
In many instances, bankruptcy may not be as bad as you expect or fear. Nevertheless, it does carry consequences and there may be situations in which an alternative to bankruptcy makes more sense than filing. Here are some options for addressing the problems associated with debt that do not involve filing for bankruptcy.
Defense against a creditor lawsuit
Sometimes a party to whom you owe money will file a lawsuit against you in an attempt to force you to pay. A creditor who successfully obtains a judgment against you may collect attorney fees and legal costs in addition to the amount that you originally owed. Filing for bankruptcy can put a stop to any creditor lawsuits, but another option, which may be appropriate depending on the circumstances, is to wage a defense against the lawsuit in court.
Debt settlement or consolidation
Sometimes it is possible to work with your creditors to consolidate your debt or negotiate a repayment plan. Your creditors may be more open to negotiating an arrangement like this if they know that you are close to filing for bankruptcy because they stand to recover more due to a settlement.
If you decide to go this route, you should know that there are bad actors out there claiming to offer debt consolidation for pennies on the dollar if you pay an upfront fee. Instead, they take your money and do no negotiation on your behalf. Protect yourself by only working with reputable organizations and avoiding any offers that sound too good to be true.