Some alternatives to bankruptcy 

Although bankruptcy is often a solution to a debtor's problems, bankruptcy is not always  the best solution. Although bankruptcy is almost always available, it may not  always be needed.

Disputed debts
One alternative is to fight disputed debts. If a creditor sues you for a  payment on a debt you don't believe is justified, you may be able to defend  against the creditor's action.

There may sometimes be a real dispute about whether a debt is owed. For  example, a home improvement contractor may arrange a mortgage loan to pay for  the job but then do shoddy work or not complete the job. Similarly, there may  be misrepresentations in a transaction to buy a car or to finance some other  major purchase.

In such cases, the solution may be to fight the debt in court. Of course,  unless free legal counsel is available, the costs of such a lawsuit may be  considerable. If the debt is large enough, though, it may be worth the  investment to obtain a fair settlement. In many cases where a consumer  protection statute is violated, the creditor may be required to pay the  debtor's attorney if the debtor ultimately wins the case or obtains a favorable  settlement.

Nondisputed debts
If a debt is not disputed, some of the other alternatives to bankruptcy  include:

• Working out informal payment agreements with creditors. If your debts are relatively small, you may be able to enter into agreements  with your creditors and avoid a bankruptcy proceeding. Nonprofit credit  counseling agencies can usually assist in working out such arrangements.
  
  
• Refinancing debts. A debtor may be able to arrange a debt consolidation loan that will allow him  or her to pay bills as they fall due. Although a debt consolidation loan does  not eliminate any of your debt, the new loan may have a longer maturity and be  at a lower interest rate than the individual debts. However, debtors should be  very wary of consolidating unsecured debts such as credit card debts into a  mortgage loan, because in doing so they will usually transform debts that can  be eliminated in bankruptcy into debts that cannot be eliminated.
  
  
• Financial assistance under state law. Often states have programs that will help you with utility or mortgage bills.  Before filing for bankruptcy, you should investigate these programs.