Do you have a lot of debt? Often high debt leads people to consider bankruptcy as a way to get rid of debt or try to repay the debt faster. But don’t choose bankruptcy as your first option – it should only be used as a last resort. In that case, can you avoid bankruptcy using debt management to get back on a good financial footing?

The basic answer to that is yes. When thinking about whether to file bankruptcy, you should consider first that probably you won’t be able to discharge, or eliminate, every cent of your debt. There are some debts, such as student loans and unpaid taxes, which can’t be avoided using bankruptcy. And if you have a job that pays regular income, you will fall under a Chapter 13 bankruptcy, which means that some of the debt you own will be paid back according to a repayment plan. If you find your self facing Chapter 13 then, it might be better to just set up your own plan outside bankruptcy.

To set up your own plan with debt management, begin talking to your lenders to see who is willing to work with you. If they know you are considering bankruptcy, they may have more incentive to work with you. Talk to your secured creditors first – the banks that have your home or car loans, for example. You don’t want to lose your home or car in bankruptcy. Your unsecured creditors, like credit card banks, should get paid last. See who’s willing to work with you on affordable payments. Also looks online for free debt snowball software or resources to show you how to negotiate with your creditors.

If you are without steady employment right now, this could be a situation in which you would benefit in filing bankruptcy. If you have no way to pay back your debt, then you need to file Chapter 7, where you can discharge all (or most) of your debts. Remember though that you may then have to sell your personal assets, like a house or your cars, in order to pay your lenders. Hope is not lost, though, as you might still avoid bankruptcy even without any income. Just take the time to work with your lenders and ask them if they are willing to give you a temporary hold o payments until you have work again.

The specific debt management strategies you should use are to cover all of your immediate personal survival needs, paying for food, shelter and utilities. Then, try to keep current on payments to your secured loans if you can. After that, use the cash you have left to pay what you can on the debts to unsecured creditors, which would be credit cards or unsecured loans. For student loans, these agencies will often work with you to put you on a hardship plan to temporarily hold your payments.

If you find that some of your lenders just flat out refuse to work with you on payment plans, or if they begin any collection actions against you, then you might have to file bankruptcy regardless in order to prevent them from proceeding. Try to leave that as your final option though. Try to use a bankruptcy filing in the case you have no other way to make your payments on your current income. If you take steps to avoid bankruptcy by sticking with your repayment plan, you can begin to see the light at the end of the tunnel.