Bankruptcy
Alternatives 
By: Edmond Dupree
Bankruptcy is a drastic step, and one usually taken by people who feel they have no other
alternative. When you are declared bankrupt you essentially lose control of all your assets. There
are certain modest personal exemption levels for different types of asset, intended just to cover
the essential things you need to get by. Anything above these levels will be liquidated to raise
money to pay off your creditors. What these exemption levels are is governed by state law and
therefore varies from state to state.
By filing bankruptcy you basically lose everything, and there are lasting consequences in terms
of your credit, future employment and reputation. It is a very serious step to take and one that
should not be taken lightly. While bankruptcy proceedings will sometimes be started by your
creditors, if you are thinking of filing for bankruptcy yourself, you need to ensure that you are
fully aware of, and have properly considered, the possible alternatives.
Bankruptcy is a result of having a very serious amount of debt that you do not have the means to
pay back. In this situation, some people think that means their only option is to file bankruptcy,
but it isn’t. You are probably beyond the reach of a debt management plan or debt consolidation,
but there are more radical solutions which involve seriously reducing the amount of debt you
owe.
The main alternative to bankruptcy is called debt settlement, or sometimes debt negotiation.
This involves using a specialist negotiator to work out new settlement terms with all your
creditors, which normally means agreeing to significantly reduce the amount owed in return for an
up front payment. You do not have to have money available for the up front payment, you just keep
paying an affordable amount each month into a separate account. This money gradually builds up and
is used towards the settlement payments as each agreement is reached.
If you are considering bankruptcy and have not already discussed alternatives with a debt
settlement company, then you should certainly do so. Do ensure that you only deal with reputable
companies though, otherwise your situation could be made worse if you are given poor advice. Always
look for well established companies who already have a reputation for delivering responsible debt
solutions successfully. You should also consult more than one company, as offers and proposals will
vary.
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