Alternatives to Bankruptcy Worth Considering

Options depend on your debts and finances. Compare written terms and seek advice before choosing a course; no alternative is guaranteed to work.

Creditors and credit counseling

Ask creditors directly whether they offer hardship arrangements. A credit counselor may help prepare a budget and discuss a debt management plan; creditors may agree to lower rates or waive fees, but not all plans suit all debts. Ask for written fees and verify what each creditor accepts. See FTC: How to Get Out of Debt.

Debt consolidation and settlement

A lower monthly payment on a consolidation loan can mean a longer term and higher total cost. A home-equity loan puts the home at risk if you cannot repay it. Compare rates, fees and total repayment; see the CFPB consolidation guide.

Debt settlement is different from a debt management plan. Creditors may refuse to settle; missed payments can lead to fees, collection or lawsuits and harm credit. Forgiven debt may have tax consequences. See the FTC guide before signing a contract.