The alternatives to bankruptcy

Can you avoid bankruptcy on your own_ To explore non bankruptcy alternatives, create a budget for your realistic, monthly expenditures for current living. Include mortgage and car

payments, but exclude all other existing debt service.

With the money you have available each month after paying your current living expenses, can you pay off your existing debts at the current interest rates in 3 years?

Forget minimum monthly payments: calculate what it really takes to pay off credit cards at credit card interest rates. Consider, too, the alternative uses of that money.

Can you reduce expenses, increase income, negotiate rates or sell assets to make that possible?

I Consider long and
-hard before resorting to liquidating IRA’s or 401K plans to pay


These assets are generally protected from collection actions by


they are hard to replenish once spent; but most importantly, using retirement savings to pay creditors may create new debt in the form of income taxes and penalties for early withdrawal. Your good intentions to repay creditors may just end up substituting Uncle Sam as a tax creditor in place of your existing creditors.

Consider bankruptcy:

If these repayment alternatives are not feasible, consider bankruptcy.
There is no magic formula that tells you whether bankruptcy is the best choice for you. An experienced bankruptcy lawyer is a great resource. Contact Ridings Law Firm for a free consultation.

In general,

  • the older you are,
  • the greater the number of your dependents;
  • the larger your debt;
  • the smaller your cash reserves or retirement savings; and
  • the greater the amount of non dischargeable debt

the more likely that bankruptcy is appropriate for you.

Legal issues and bankruptcy questions are frequently complex and individual. The information contained here is intended to be educational only: it is not legal advice nor does it create an attorney client relationship between the viewer and the firm. You should consult with a bankruptcy attorney licensed to practice in your state for advice about your particular situation.