The first option you should consider is speaking with your creditors directly. Many lending agencies may offer payment plans that you were unaware of, or you may be able to negotiate a modified payment plan after explaining your circumstances. Go directly to the source and speak with those whom you owe money. You may be surprised to find that your creditors are willing to work out some sort of agreement.
There are many legitimate credit counseling services throughout the United States that may be able to assist. The United States Department of Justice has provided a list of approved credit counseling agenciess that are listed by state. A credit counselor can, in essence, act as a liaison between you and your creditors to work out a possible repayment plan that works best for you.
Another option debtors often consider is taking out a second mortgage or home equity line of credit. This may not be the best option though. Yes, you would be consolidating your debt to a more manageable level, but what are the costs? For one, taking out a second mortgage is essentially making your home serve as collateral. Be sure to speak with a bankruptcy attorney like those at our firm who could provide you with the bankruptcy alternatives that might be available to you. If none of those options seems to fit your situation, then you may want to begin considering bankruptcy.
Bankruptcy is a favorable option for debt resolution to many individuals. Once you have decided to file for bankruptcy, you need to decide whether Chapter 7 or Chapter 13 is right for you. Chapter 7 is often referred to as “total bankruptcy” because it discharges all debts by way of liquidation with some exemptions. Chapter 13 bankruptcy allows debtors to reorganize their debts to a more manageable level. Those who do not pass the means test and fail to qualify for Chapter 7 can file for Chapter 13.