The alternatives To Filing for Bankruptcy

You could write to your creditors and seek an informal arrangement that allows you to pay back your debts over a specific time that they agree on. The only disadvantage to doing this is that it won't be legally binding and your creditor might choose to ignore it later on and seek direct payment.

If your debts are relatively small like $5000 or less and you have a regular income the court may agree to set up an order so that you can pay your creditors each month but through the court. Of course, for debts this small a credit union might be your best bet. These are basically just banks that are set up to direct your wages toward your debtors, but they will also help to reduce the payments for you and in some cases even delete some of your creditors all together.

If you do have severe debt problems, such as debts over $10,000, you may have to turn to bankruptcy to help you. You may also set up payment arrangements with your creditors. You can make an agreement between you and your creditors that will allow you to repay a percentage of the debt over a set period of time, which is usually around five years.
 
The advantage to doing this is that you will have more control over your assets, have fewer restrictions and you won't be categorized as bankrupt. This is excellent should you be running your own business. However, sometimes, filing for bankruptcy is all that you can do. In this case, it helps to know the exact process. That is what the next section will help you with.