Going Bankrupt: Is It My Only Option?

Jul 28, 2020 | Lifestyle

Your debts are piling up and you’re unable to pay them off. Should you file for bankruptcy? Or are there still other options?

While bankruptcy can be the right decision for some people, it is rarely the only way out of debt. Below is a brief guide to going bankrupt and the alternative methods that may still be out there.


Going bankrupt allows you to quickly wipe your debts and start over. A bankruptcy judge will determine whether you are eligible by assessing your financial situation (if you’re deemed capable of paying off the debts, you may not be able to file for bankruptcy). A trustee will handle the process for you and there is little direct contact between the debtor and judge.

Declaring bankruptcy comes at a cost. In order to pay off as much of your debts as possible, some of your assets may be sold (this could include your house if you’re a homeowner, your car or your business if you are a sole trader). Your credit score will be greatly reduced, making it impossible to apply for future loans for several years. Secured debts such as a mortgage or court fines will also not be wiped. All unsecured debts (such as credit card debts and personal loans) will be wiped though and creditors will no longer be allowed to chase you up.


Bankruptcy is rarely the only option. There are other ways to get out of major debt that could be better suited to your circumstances. These include:

1.  Debt Consolidation

If you’ve got lots of debts and multiple creditors are chasing you up, you could consider consolidating your debts. This involves taking out a single large loan to pay off all of your debts. Some consolidation loans are designed for people with low credit and allow you to pay in fairly small instalments, although there may be a lot of interest added. Large debts could still take a decade to pay off. You have only one creditor to deal with however, making it easier to keep track of your debt. You can read more about debt consolidation here at Money Expert.

2.  Debt Settlement

With the help of a debt settlement plan, another option could be to negotiate methods of reducing your debts and wiping certain debts by talking directly with creditors. An experienced debt advisor can deal with your creditors for you, handling the negotiation process and helping to lower your debts. You’ll generally have to pay a fee as well as upfront payments to creditors and not all your debts may be wiped. However, a large amount of your debt is likely to be reduced without needing to sell assets.

3.  Other Forms Of Debt Relief

There are other forms of debt relief out there that can help you to eliminate your debts. Some debt relief companies are experts in debt law for instance and may be able to help you find financial independence. There are some scam companies out there, so you need to be careful. The likes of DTSS scam no-one and are able to relieve you of debt legally by essentially setting you up as your own private bank. Such options could be far less damaging than declaring bankruptcy.


Bankruptcy is suited to individuals that want a fast way out of major debt. If you have little in the way of assets, there may be little risk of losing anything and you may not notice the difference bankruptcy makes to your credit score if you already have low credit.

Other forms of debt relief are better suited to those that are willing to wait and who don’t want to pay the price of losing assets or having their future financial freedom restricted. It’s worth talking to a debt advisor about all these alternative options to find the right one for you.


– a contributed post

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