The question is, which route do you want to take?

Bankruptcy is basically the last resort for someone with a bad debt situation. When you file for bankruptcy, it stays on your record for many, many years making it nearly impossible for you to secure many types of loans. Be aware that there are alternatives to bankruptcy that have less dire consequences for you.

Debt consolidation is probably less damaging to your credit report. With a debt consolidation program, you pay a single payment to a consolidation company who then turns around and pays your creditors each month. This is one of your alternatives to bankruptcy.

You can reduce the amount you have to pay out each month by hundreds of dollars in most cases. You also pay more to principal than you ever would if you were trying to pay off the debts without assistance. This is because the consolidation company has negotiated with your creditors to reduce or eliminate the interest on your balance.

Debt settlement can be a little more tricky, but it is still one of your alternatives to bankruptcy. The debt settlement process involves negotiations where the collection agencies agree to settle for a certain amount that is less than the total balance you owe.

Generally, debt settlement agencies collect money from you for a certain period of time, months or years. Once a certain amount of money is collected, the debt settlement agency offers an amount to each creditor or collection agency. Be advised that while the debt settlement agency is collecting your money, over months or years, your debts are not being paid.

It is very important when you are considering alternatives to bankruptcy that you are very careful in which agency you pick to assist you with your debts. Unfortunately, not all agencies are reputable ones. Don't be afraid to ask questions of any agency you are considering using. Also, check with the Better Business Bureau to see if any complaints have been filed on the agency.