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None of us ever plan to go bankrupt but you hear about it happening to large corporations all the time. Finding an alternative to bankruptcy could save you a lot of hassle.

Think about a debt consolidation loan. Debt consolidation means that all of your debt is put together and a loan secured for the total amount. Creditors are paid what is owed to them and the bank that issued the loan is given a monthly payment that is within reason for the consumer.

Debt consolidation mostly includes unsecured debt. This would be credit cards, store credit cards, unsecured lines of credit from companies, and gas cards. Unsecured debt is what creditors have a hard time recouping from people because it is not backed up by any collateral.

You can go through an agency if a bank isn’t willing to consolidate your debt. Counselors will negotiate on your behalf as they are used to dealing with these agencies. In some instances you can have your debt dropped by as much as 60 percent. The agency takes care of the creditors and you make just one monthly payment to the agency.

You do not have to liquidate your assets to consolidate you debts. In the case of bankruptcy, the court may order you to sell your belongings to raise money to pay your creditors. With debt consolidation you can keep your belongings and have another option.

Something else that you can do yourself is to get another income. It’s not the easiest thing to do but if it allows you to increase your credit card payment monthly for a year or two until it’s eliminated, it could be worth it. If you can’t manage a second job then maybe you can get some overtime at your current one. The key to reducing your debt is finding a way to bring in more money.

A second income can also give you extra money while paying off a debt consolidation loan. Life has a way of throwing things at us when we least expect it and a little extra cash can help with that. You can save for a rainy day and still pay off some of your debt.

Starting a home business is another option. Some home businesses can be started with little or no money if you don’t have time for a second job. Even selling items on eBay can bring in some extra cash when needed.

Do you have a special skill? Market that to others who could use your services. Remember to earmark the money to be used for resolution of debt and not to spend freely and incur more debt.

There are better alternatives than to file bankruptcy. The alternatives that you pick don’t need to be forever, just until you can get yourself back on track financially.

Last 5 posts by William Blake

• How To Reduce Your Credit Card Debt Without Debt Reduction Services - August 19th, 2008
• Bankruptcy Doesn't Have to Be the End - August 15th, 2008
• Being Frugal Now Can Mean Future Security - August 15th, 2008
• The Hidden Dangers Of Debit Cards - August 14th, 2008
• Credit Unions Versus Banks - August 14th, 2008

Tags: Finance