Non-Bankruptcy Alternatives


Negotiate with creditors on your own:


Before you begin to negotiate with your creditors, you need to determine how much you can realistically afford to pay each month toward your debt. To do this, you need to make a budget of your living expenses so you can determine how much, if anything, is left over to apply to your debt. You can use this Budget Form to prepare a budget. Download the budget spreadsheet as an interactive budget in Excel Format or as a printable PDF Format.


You should create a monthly budget so you can see how much money, if anything, you have left at the end of each month that you can apply toward your debt. Be realistic and use averages. If your income or expenses fluctuate from month to month, use figures that are an average of 12 - 24 months. If you don't, your budget may not be reliable.


For example, "auto maintenance" is a category that varies from month to month. Combine all expenses in these types of categories and divide by the number of months you have used. If you fail to do this, one major home or auto repair, and you budget is thrown off and you will no longer be able to meet the repayment plan you have committed yourself to on a monthly basis. This is the reason many repayment plans fail.


Also, be sure to include all your expenses, even those that creep up rarely, such as vet expenses for pets, title/license renewals, etc.


Credit Reports


If you are not sure about who all your creditors are, you may want to obtain a credit report. You can obtain a free credit report HERE. A word of caution: do not relying solely on a credit report to identify your creditors. All debts are not reported to the credit reporting agencies. Go through your bills and your memory. If there is a debt you believe you owe, but cannot find the bill, you should factor the debt in when preparing you budget and you should list that creditor if you do file for bankruptcy. If you fail to include the debt, it may not be discharged. Credit reports should only be used to supplement your memory and your records.


After you determined how much you can pay each month, calculate how long it will take to pay off your debt. You can approach your creditors and request for interest rate or payment reductions. However, there is no guarantee that your creditors will honor your requests. If you cannot make a lump sum payment to pay a debt off, or if it will take more than three or four years to payoff your debt, you may need to consider bankruptcy.




Do not liquidate your RETIREMENT ACCOUNTS to pay off debt. Retirement accounts have taken you a lifetime to build up, and, depending on your age, will be very hard to replace. Will you be able to live on Social Security alone? There are also serious tax consequences when you cash in retirement accounts; not only are you required to pay the income tax due on the funds, but also a ten percent (10%) penalty. Further, if liquidating your retirement accounts does not solve your debt problems you may still end up in bankruptcy only to learn that your retirement accounts were very likely protected in a bankruptcy. Before you liquidate your retirement accounts, you should seek legal advice.


Credit Counseling Services

If you cannot create a budget that will allow you to pay off your debt within a few years, you may want to contact credit counseling service to get a free assessment of your financial situation to determine if they can help for you. These organizations negotiate with creditors on your behalf for reduced interest rates and fees so you can repay debt and avoid bankruptcy.


Please be aware that if you have non-dischargeable debt, such as taxes, student loans or child support arrears, and you elect to pay dischargeable credit card debt through such a program while NOT paying non-dischargeable debts, you may not be moving toward a resolution of your debt problems. If you have non-dischargeable debt, you should seek legal advice before deciding between credit counseling or bankruptcy.


Please call 216.225.9181, Email, or use the contact form to schedule a consultation.