Bankruptcy may not always be the best solution for many reasons. You might have to risk non-exempt assets, your debts may be non-dischargeable, or you may not be eligible to file.
You might want to take other steps first. You could try to sell whatever assets you have to pay off your debts. If you own anything valuable, such as jewelry, cars, or watches, you may want to consider selling them first to try to pay off your debts. Another option may be to approach family and see if they are willing to help you. Of course, many people prefer not to involve family, especially if you can qualify for bankruptcy.
Transferring credit card debt to a lower interest credit card will only solve your problems temporarily. Oftentimes, credit card companies will fight to collect their money if you file for bankruptcy after transferring large debts to a new card.
Refinancing your home if you have equity is another alternative, or you may be able to get a home-equity line of credit. You want to make absolutely certain you can afford the payments because if you can't, you risk the roof over your head. You must be very cautious about trying to pull equity out of a house to pay creditors, especially if bankruptcy could provide a way to preserve your equity and still eliminate your debt.
Tapping into your retirement plan is oftentimes ill-advised. The reason is because pension plans are generally safe from bankruptcy. You will be able to keep your pension or retirement money, unless you borrow against it. If you borrow against it, your creditors can attack your pension or retirement money during bankruptcy and you will have to pay income tax penalties on an early distribution.
