How to Get Out of Consumer Debt Without Taking Bankruptcy

Bankruptcy is an option if you cannot handle your bills any other way, but you may be able to handle your consumer debts without that drastic step. Even though bankruptcy either cancels your debts or provides an affordable repayment arrangement, it also brings down your credit score and appears on your credit reports for a decade. Other debt relieving arrangements often have less negative impact on your ability to get future loans and accounts, and you do not have to go through a court case and pay an attorney.

Instructions

1

Call a nonprofit consumer credit counseling agency and make a consultation appointment. Credit counselors are trained to help you look at all your options for getting out of consumer debt, from simple steps like budgeting to more involved measures like structured payment arrangements, according to the Federal Trade Commission. Counselors sometimes recommend bankruptcy if your debt cannot be handled through less extreme methods, but they try to work out other options first.

2

Bring a complete list of your income and expenses to your credit counseling session. The counselor needs an accurate picture of how much you owe your creditors and how much you can realistically afford to repay. Sometimes getting your consumer debt under control simply takes some objective help with cutting your expenses and creating a budget. The counselor can help you make a budget plan or suggest other measures.

3

Decide whether you wish to follow the credit counselor's recommendations for getting out of consumer debt. The recommendations might include a budget, financial education classes or a formal debt management plan created by the counseling firm. Such plans often include concessions from your creditors like reduced interest rates and waived penalty fees. You are free to accept the counselor's advice or to file for bankruptcy if you believe that is a more feasible option.