Some people with serious debt problems try other ways to fix the problem before considering bankruptcy. Unfortunately, some of those fixes can result in the loss of assets that could have been saved by filing bankruptcy sooner.

For a person with serious debt problems, it’s good to explore all of your options before taking steps that cannot be undone.

Here are some examples of fixes that rarely work:

  • Withdrawing retirement savings. Dipping into your 401(k) and IRA savings usually amounts to robbing from yourself to pay a credit card company. If you file bankruptcy, you can discharge many types of debt while protecting your retirement savings.
  • Skipping house or car payments. Skipping house or car payments can result the loss of assets you want to keep. Rather than risk loss of your home or car, you may be better discharging other types of debt, such as credit card bills, in bankruptcy.
  • Debt consolidation. Debt consolidation services (along with debt negotiation) usually promise big savings but rarely deliver. These services cost a lot of money up front, and may not solve the problem of too much debt. In addition you would have to pay taxes on any debt that is forgiven. Bankruptcy provides tax-free debt relief.
  • Payday loans. Due to the high interest charged by payday loans, your financial situation is likely to get worse instead of better.

Bankruptcy isn’t for everyone, and a person should explore all of his or hwe options before making a decision. Only an experienced attorney can advise you if bankruptcy is the best option in your case.