For many bankruptcy is a four-letter word. And it should be. This option should be the absolute last considered when it comes to debt elimination. Although it can wipe debt clean and give a person or a business a clean slate from with which to work, the impacts of bankruptcy are harsh and sometimes can be avoided. Before leaping, it's a good idea to truly examine a situation and look at other avenues of redress.



If debts have gotten out of hand and a solution seems hard to find, there are some things a person can do before charging into bankruptcy. They include:

* Assess all debts versus income. Is there a way to handle the debt without filing for legal redress? If income outweighs monthly payments, bankruptcy might not be the answer. Careful handling of cash assets and payments might be the smarter route. Setting a budget and sticking with it would be in order.

* Contact creditors and try to negotiate lower interest rates. If you've made your payments on time all the time, this might be an option for helping you avoid bankruptcy and get out of debt quicker. This doesn't always work, but some credit companies will be more than happy to work with a good client.

* Create a debt management plan. If it's possible, pay off credit cards one at a time. Take a look at the smallest balance card and set a date for paying it off. Once this is done, dedicate the money that would normally go on that card to another one. Rinse and repeat until debt is erased.

* Don't add more debt while you're paying old debt down. Live within your means, reserving credit for emergencies only. This can be hard to do, but if a future without debt is desired, this practice will greatly help you in attaining that goal.

* Seek help from credit management companies. If you know you can pay off the debt without seeking bankruptcy, but you can't come up with a viable plan on your own, seek help. There are nonprofit companies dedicated to helping consumers get out of holes they've dug for themselves. These companies look at all the debt a person has, work with creditors and negotiate settlements. Although it's true credit involved in the settlements will be unusable during the repayment periods, the bottom line presented by these settlements can be much lower and more manageable than the debt prior to the agreement. This methodical process for paying off debt has worked for thousands and thousands. Just make sure you're dealing with a reputable company.

If debt and monthly payments outweigh income, bankruptcy might be the only alternative. If it is, you're not alone. Thousands of individuals and companies file for bankruptcy every year. Bad things happen to good people; it's a fact of life. Just remember as you're going through the process to hire good legal representation, follow the laws and be certain not to dig yourself back into the same hole when the process is over.