Striving to avoid bankruptcy is a smart goal. In most cases, with the right financial advice, you can work through your debt problem and get your personal finances back on track. You may have to reach out and get help with your debt, but that can be a good thing. You’ll have the opportunity to learn better, more effective ways of managing your money, improving your life and protecting your future. Even if you are struggling with what seems like an unmanageable debt burden, you do have options.



Credit Counseling and Debt Management                  

There is no shame in calling on professionals for solid financial advice. If you had all the answers, you wouldn’t be worried about bankruptcy. The sooner you seek help, the more options you have available to you. Sometimes, resolving your debt can be as simple as having an experienced professional look over your financial situation and help you to devise a spending plan with a solid debt pay-down strategy. You’ll learn money management skills that will help you throughout your life, far beyond your debt problem.


Debt Consolidation

Taking this step can help you to avoid bankruptcy by satisfying your creditors via a loan that pays them off right away. Then, you’ll pay back your debt consolidation loan in monthly payments. Typically these loans come with a better interest rate than you are paying on much of your debt, especially if you have a lot of high interest credit card debt to contend with. If you have a high debt total and a damaged credit score, expect to have to secure the loan with your home. Understand what you are risking if you choose this option. Be as sure as possible that you’ll be able to keep up with the payments.


Debt Settlement

If the debt is too large or securing the repayment of a consolidation loan with your home feels too risky, debt settlement may be the better option for you. In this type of arrangement, you pay a debt professional to negotiate with your creditors. The goal is to get your creditors to reduce the amount of your debt.

Your creditors know they run the chance of getting nothing back if they don’t sit down at the bargaining table, so often they are willing to make concessions. Then, they are paid out of an account that you’ve made regular deposits to. Depending on negotiation results, they will either get a lump sum, once it is accumulated in your special account, or monthly payments.


Run Your Numbers

Always do the math. That is important financial advice. Find out what each option you are considering to get out of debt will cost you in the end. Make sure to find out all potential costs, including tax implications for forgiven debt, fees associated with professional help, and how much more you’ll be paying in interest by restructuring loans. Weigh your risks carefully. Choose the option that you are more likely to succeed with, and look forward to making a better financial future a reality.


Jeffery Sterner is a blogger with America’s Debt Help Organization—, and helps educate Americans on how they can become financially independent by paying down their personal debts.