The prospect of filing bankruptcy may frighten you. Likely, you will fear the possibility of losing your home, your vehicle and other important assets during proceedings. While these outcomes are far from guaranteed, they may have you considering alternatives. Yet, before moving forward with one, you must understand if it makes sense in your situation.

Negotiating with creditors

You may think that your creditors will refuse to negotiate with you about your debts. Yet, they might be receptive if you let them know that you are having financial difficulties and if you approach the conversation with a proposed settlement. Keep in mind that paying less than what you owe could further hurt your credit score. But it also offers you the opportunity to discharge your debt at less than its total value. And your creditors will be glad to receive partial payment, rather than none at all.

Credit counseling

If you can afford to pay off your debts in full, yet need help finding a way to manage them, you may want to take part in credit counseling. In doing so, you will work with an organization that gives you strategies for budgeting and managing your debts. Put in practice, these can help you avoid bankruptcy. Yet, you will want to watch out for agencies that charge fees for information or demand excessive financial contributions. Many credit counseling programs are free and working with an agency that makes you pay for their services – or enroll in a debt management plan – could lead you further into debt.

Decreasing your expenses

Your current lifestyle may push you beyond your means. If your debt stems from overspending, trimming back your expenses can be an effective way of managing it. By living within your means and avoiding unnecessary purchases, you will have more money in your budget for satisfying your creditors. Yet, if you have a limited income, paring down your expenses may be difficult or impossible.

While the possibility of avoiding bankruptcy may seem enticing, filing could lead to greater relief in your situation. By consulting a bankruptcy attorney, you can determine which option makes sense for you.