Most people prefer to file bankruptcy the time they realize they are in over their heads, and they feel such as there is nothing that can be done to get out of debt. However, bankruptcy should be utilized as an absolute last resource - after all other options have been carefully studied and exhausted.

Before deciding to file bankruptcy, consider each and every one of the following bankruptcy options: 

• Refinancing 

• Debt Consolidation 

• Debt Settlement 

• Debt Negotiation 

If after you have considered every bankruptcy option, you still see that your personal debts are greater than the money you have available to make monthly payments, you might have no option other than bankruptcy. 

Refinancing 

If you are a home owner and have never refinanced your home in the past year, it could be possible for you to obtain extra money from the equity you have in your home, and utilize it to pay off your other debt.  This will get rid of the payments each month on every one of your credit cards or loans that you have used your refinance to pay off, and let you make a single, more affordable monthly payment.   If you can use refinancing of your home to manage your debt, make sure that you don’t go out and get another credit card or car loan, for the reason that at any time you could be right back where you were before the refinance! 

Debt Consolidation 

Many people can consolidate all of their monthly credit card and loan payments together by getting a debt consolidation loan.  Usually, a consolidation loan requires some sort of collateral to secure it.  Unfortunately, you do need to have fairly good credit to qualify for a debt consolidation loan.  However, this is a good choice if you find yourself in over your head before the payments start becoming late. 

Debt Settlement 

Occasionally you may be able to settle your debt out of court.  Although you could get a debt settlement by yourself, it is recommended that you find a reputable company to assist you in negotiating with your creditors in order to reduce the amount of money you owe.  Usually, creditors are willing to accept less than the total amount owed if they think you are going to file bankruptcy.  They understand that a settlement is going to give them more money on the balance owed than the bankruptcy will, and it is in their best interest to work with you in this situation.  If you want to settle all your debts, it would be better if you have money on hand to immediately pay your creditors and get them to close the account, and report it as “paid as agreed” to your credit report.  If you have received reasonably large tax return for instance, you can attempt to settle your debt with every creditor by offering them the total amount owed to close out the account. 

Debt Negotiation 

When you negotiate your debt, it could be helpful, although this will not necessarily mean that you will completely get out of debt.  Call all of your creditors and converse with them that you experiencing financial problems.  Explain to them that you are considering bankruptcy, before you jump into it you might want to see if you could negotiate your debt with all of our creditors to obtain payment arrangements that work better with your financial condition. Various credit card companies will lower the interest rate and stop late fees and finance charges from happening, and it really helps you begin paying your balances.  The problem with credit cards is that when you have a late payment, the interest and finance charges every month are as much as or more than your monthly payments, so you are paying each month and never reducing your balance.  With lower interest rates, and creditors who stop the finance charges and the late fees temporarily, you could begin chipping away at the actual balance, and perhaps pay in full some accounts for the duration of the negotiating stage. 

As you can see there are different bankruptcy options you have to choose from. Study them all and based on your situation, pick the best alternative for you. You may be able to get out of debt without bankruptcy after all.