Bankruptcy Options and Alternatives

Generally, the bankruptcy options for consumers involve two types of filing choices Chapter 7 and Chapter 13. Chapter 7 eliminates the mitigating debts that have piled up for both individual consumers and businesses. Chapter 13 restructures debts for individuals to put them into more manageable increments of payments. Normally, payments to creditors on a Chapter 13 filing are paid off over the course of 3 to 5 years. These chapters will effect assets such as homes, consumer debts, and credit. These choices will affect credit for as many as ten years. The chapters stay on credit reports for three years beyond when most debts fall off, which is typically seven years. The ability to obtain credit and loans for homes and autos can be affected for a few years beyond the process. Consumers should only go for these solutions as a last resort when every other possibility has been exhausted.


Statistics show that about one in every seventy people file on an annual basis. Bankruptcy options are of the utmost urgency to keep more consumers from filing. Some consumers really believe they are without any other choice. Many will file proceedings for amounts as minimal as $5,000. The burden of insurmountable debt and relentless creditors calling and sending venomous letters, causes consumers to succumb to this as their sole choice in the matter. Credit counselors may even advise a person that going for broke is the best way to go. This may or may not be true since the implications of filing can remain as public record with the courts up to twenty years. Employers can dig and sometimes find the information decades after items have been discharged from a person's credit.

We need more bankruptcy options for people. Lenders need to take some responsibility and have more programs in place to assist debtors that find themselves in trouble. Sometimes predatory lending practices can land a person into a situation where they seem to have no other choice. Also, credit should only be extended to people who truly are qualified. Stricter measures need to be put in place to help with the situation.

Bankruptcy Alternatives

With the options that are out there for consumers as bankruptcy alternatives, filing can now be a last resort. There are a number of ways that the financially pressed can go about avoiding what used to be the inevitable of going belly up. Sometimes it pays to renegotiate secured loans such as auto, boat, and mortgage loans. The outcome of the negotiation truly depends upon the willingness and ability of the creditor to work with the debtor. In some circumstances they can offer a lower interest rate or smaller, more manageable payments. This is especially true of credit card debt. It is in the best interest of the consumer who is financially up against it to inquire about lowering interest rates, payments, and if all else fails ask for a settlement. Some will be willing to settle for mere pennies on the dollar.


The bankruptcy alternatives floating around in the financial world these days are growing by leaps and bounds. Consumer credit counseling that offers their services free of charge is a great option for those that find themselves landed squarely in this situation. An agency that provides this type of service has the negotiation skills to work with many creditors on several different levels. They know what to ask for as far as fair monthly payments and lower interest rates are concerned. Also, they have the expertise to know the lingo necessary to get what you need from the creditor. They know "buzz words" that will give them the right rapport with creditors. However, always check out any consumer credit counseling agency before doing business with them.

Sometimes consumers feel their best advocate is themselves. They may explore bankruptcy alternatives on their own. If there is a family member with good credit who really wants to help the consumer he or she may be able to get a loan to help payoff consumer debts. If this is not an option consumers may set about looking over the bills and seeing if creditors can stretch the payments to be paid off within an allotted period of time. Some creditors may allow the consumer to defer payments for a certain length of time.