Bankruptcy is one of those situations that sometimes simply cannot be avoided.  You could've had the best credit and be on top of all of your bills when one major catastrophe in your life causes it all come crashing down around you.  You are not alone when it comes to financial difficulties, as many people have had to file for bankruptcy before you and many more will file after you.  Bankruptcy is not a bad thing.  It's a way for people to get their life back to normal, and there is absolutely nothing wrong with taking this path if you deem it is the right one for you. 

If you find yourself in financial trouble and you are not sure whether or not you should file bankruptcy, you may wish to consider a few alternatives first.  The one thing everyone should remember when exploring alternatives to bankruptcy is that any organization or financial institution they get involved in should be legitimate and on the up and up.  You do not want to do anything that is going to make your financial situation worse than it already is. Always double check to make sure that by using one of these options it does not forfeit your right to bankruptcy if you have to file later down the road. 

There are three alternative options that offer you the most choices and can help you out of your financial situation.  Let's take a look at each of them. 

Out of court settlements allow you to settle your current unsecured debt without filing bankruptcy and at a considerably reduced amount.  Most people are not able to do this without the assistance of an organization that will negotiate on your behalf with your creditors.  Always use a company that is experienced and professional when choosing this option, and that they are handling your negotiations within the current boundaries of the law.  Keep in mind that an out of court settlement could have a negative impact on your credit rating. 

Debt counselling services are another way to help get your financial obligations reduced and paid off quickly without filing for bankruptcy.  You bring them your bills and they will help you set up an affordable monthly payment and obtain debt reductions measures for you from your creditors, such as interest reductions on unsecured debts.  Not everyone will qualify for help from a debt counselling service as their financial obligations may not fall within their guidelines or they will not benefit from a single monthly payment.  This option could also have a negative impact on your crediting rating depending on how the repayment arrangements are made. 

Finally, debt consolidation loans can use the equity in your home to help you pay down your debts.  Once again, be careful when using this alternative as defaulting on the home equity loan could put you in a worse situation and put you in danger of losing your home.