What can you do when you are over your head in debt? There may seem like no way out.

While the journey is by no means simple or easy, you have different avenues to choose from to help you get back on track to financial security. Consider if one of these solutions may be the answer.

1. Bankruptcy

The approach most people are familiar with is bankruptcy. As a consumer, two types are available to you, Chapter 7 and Chapter 13. Chapter 7 eliminates most debts while still protecting some of your property. However, you have to qualify for it. If you make too much money, you have to go with Chapter 13 instead. This one involves creating a repayment plan to pay off some of the debt in a few years and keep your assets.

Bankruptcy can be the best choice under any of the following circumstances:

  • You are in deep financial trouble
  • Your situation has been long-term
  • You have many assets to protect
  • You want to stop wage garnishment
  • Other options have not worked

If most of your debt is from student loans, taxes or child support payments, bankruptcy cannot offer relief, as these debts are not eligible for discharge except in extreme cases.

2. Debt settlement

An alternative to declaring bankruptcy is negotiating with your lenders, such as credit card companies. They would rather get some of their money back then nothing, as in the case of Chapter 7, so they may be willing to work with you on establishing an affordable amount to repay them. Loan modifications are similar in that you renegotiate the terms of the loan. 

3. Debt consolidation

Another solution is a debt consolidation loan, which combines all your debts into one loan to pay off. However, this and other methods of relief outside bankruptcy are incredibly risky, warns the Consumer Financial Protection Bureau. More often than not, companies do not deliver and make your situation worse. Avoid any business that makes amazing claims or charges upfront fees.