There is exponential growth in filing for bankruptcy among individuals and businesses with debts. There has been a 43% increase in such cases last year, according to the report released by the administrative office of the U.S. Court. The laws have been reformed to make it harder to attempt filing for bankruptcy. One should also keep in mind the legal implications like the payment of taxes to the State or Federal Government. The cost of filing for bankruptcy is around $300 but the average fees of the attorney are around $2000. Therefore it is necessary to consider alternate routes before attempting it.

• The most basic alternative is a “Judgment Proof” - Means taking no action because with a small income the creditors will not be able to collect anything from you.
• Planning a budget: Finding areas where expenses could be reduced and arrange for an extra cash flow.
• Negotiating with the creditors: Negotiating a settlement for the creditors is always a far better option than losing everything in a bankruptcy.
• Applying for a non signature loan or obtaining a loan from a relative can save you from filing for bankruptcy.
• Selling out assets like a second car or family heirlooms, jewelry, etc. or selling out the home and paying of the debts with the return.
• The nonprofit organizations that provide counseling services can be found on the United State’s Trustees associated website. They help to reduce the interest rates or sometimes the full amount of the debt.
• Restructuring of debt allows you in to renegotiate and reduce the debt with creditors to improve and rehabilitate your financial conditions. Out of court restructuring or workouts are increasingly becoming a more sought after option.
• Debt consolidation: This involves borrowing from another bank or individual at a low rate of interest.

Thus, you can follow any of these various methods before filing for bankruptcy. Please make sure that bankruptcy is always your last resort, after you have tried out everything else.

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